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NEW YORK — Sony BMG Music Entertainment agreed to pay $1 million to settle charges by the Federal Trade Commission that it improperly collected and disclosed personal information on thousands of children under 13 without their parents' consent.
The FTC said Thursday the civil penalty is the largest ever to be paid in a case alleging violation of the Children's Online Privacy Protection Act. It does not mean the company admitted to any wrongdoing.
Sony executives close to the matter confirmed that the company agreed to pay the fine and has put a screening process in place that complies with the FTC's rules. Sony will also hire a Web compliance officer to make sure the sites follow the rules, said the executives, who spoke on condition of anonymity.
"Sites with social networking features, like any Web sites, need to get parental consent before collecting kids' personal information," said FTC Chairman William E. Kovacic in a statement.
The FTC said Sony Music, which operates more than 1,000 music sites for its music artists and labels, "knowingly collected personal information from at least 30,000 underage children without first obtaining their parents' consent" on 196 of its sites.
The FTC order requires Sony Music to delete all personal information collected and maintained in violation of the rule. For the next five years, Sony also must provide links to FTC consumer education materials on those Web sites that fall under the Children's Online Privacy Protection Act — including those that target or collect personal information on children.
The FTC's complaint was filed in federal court in New York on Wednesday afternoon. The settlement was submitted for the court's consideration at the same time.
Sony BMG is now Sony Music Entertainment Inc., after Japanese electronics company Sony bought out its partner Bertelsmann AG in October.
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