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Microsoft Settles FTC Charges for $20 Million Over Violation of Children's Online Privacy Protection Act

These big companies just don't learn, do they?
by Natalie Collazo on June 06, 2023   

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Microsoft has agreed to pay $20 million to settle charges brought by the Federal Trade Commission (FTC) regarding violations of the Children's Online Privacy Protection Act (COPPA). The company was accused of collecting personal information from children who signed up for its Xbox online program without parental consent and retaining children's personal information illegally.


The proposed settlement includes measures to enhance privacy protections for child users of the Xbox system. The order extends COPPA safeguards to third-party gaming publishers that receive children's data from Microsoft. It also clarifies that avatars, biometric data, and health information fall under COPPA regulations when collected alongside other personal data. The settlement is still pending court approval, though the information was released to Twitter.
 


Under COPPA, online services and websites targeting children under 13 must notify parents about the personal information they collect and obtain verifiable parental consent. To access Xbox games and features, users must create an account and provide personal information. Microsoft previously required users under 13 to provide additional personal details before involving their parents in the account creation process. The company retained this data, even when parents failed to complete the process, which goes against COPPA guidelines.


The complaint highlighted Microsoft's failure to disclose certain collected information, such as a child's profile picture, avatar, and gamertag in compliance with COPPA notice provisions. This information could then be shared with third-party developers. Microsoft also allowed all users, including children, to play third-party games and apps by default, necessitating parental opt-out.


In addition to the monetary penalty, Microsoft must inform parents about the privacy benefits of creating separate accounts for their children. For accounts created before May 2021, parental consent must be obtained if the account holder is still a child. The company is required to establish systems for timely deletion of personal information not authorized by parents. It must also notify video game publishers when disclosing personal information of children, obligating publishers to apply COPPA protections.


Interestingly enough, Epic Games was faced with a similar lawsuit late last year that required them to pay out $520 million for collecting children's information. By comparison, it almost seems like Microsoft got away with a slap on the wrist, though they don't have the same reach towards children that their rival does with Fortnite.


Check back with DailyGamer for more news and information about Microsoft and the FTC.

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