Disney-Owned Video Game Firm Agrees to Record FTC Settlement

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An online game company acquired by Walt Disney Co. last year agreed to pay $3 million to settle federal charges that it earlier illegally collected and disclosed personal information from hundreds of thousands of children under age 13 without their parents’ consent.

The Federal Trade Commission announced on Thursday that the settlement with Playdom Inc. constitutes the largest civil penalty ever for a violation of the federal legislation that requires companies to obtain the consent of parents before collecting, using or disclosing information about children under the age of 13.

Playdom operated 20 Web sites that collected children’s ages and email addresses during registration and allowed children to post their names, email addresses, instant messenger IDs and location on personal profile pages and in online community forums. About 403,000 children registered with certain Playdom sites between 2006 and 2010, according to the FTC complaint, and 821,000 additional users registered with its Pony Stars site.

Playdom acquired the targeted sites when it bought developer Acclaim Games Inc. last May. Most of the affected sites had been shut down or sold by the time Disney acquired Playdom in August. It now focuses on games for social networking sites, including the Facebook game “Gardens of Time.”

“Disney is pleased that Playdom and the FTC have now resolved this matter amicably,” Disney said in a statement.

In its second quarter earnings report on Tuesday, Disney said that despite a 3 percent gain in interactive unit revenue to $158 million, the unit had an operating loss of $115 million in part due to costs related to the Playdom acquisition. The company took a $34 million accounting charge related to the purchase, but at the time did not say whether any legal settlement was included in that amount.

Disney shares closed up 6 cents, or less than 1 percent, to $41.58 on the New York Stock Exchange.

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