Disney Faces Hefty Fine: FTC Alleges Major Child Privacy Violations in Club Penguin Island

In a significant move to protect children's online privacy, the Federal Trade Commission (FTC) has proposed a substantial $3 million fine against entertainment behemoth Disney. The allegations center on Disney's now-shuttered Club Penguin Island app, accused of violating the Children's Online Privacy Protection Act (COPPA) by illegally collecting personal information from millions of young users without obtaining verifiable parental consent.

This isn't Disney's first encounter with the stringent rules designed to safeguard minors online.

The proposed settlement echoes a similar $3 million agreement from 2017, where Disney faced penalties for separate COPPA violations. The FTC's latest complaint highlights a troubling pattern, indicating that despite prior enforcement, Disney allegedly continued practices that put children's data at risk.

COPPA mandates that online services targeting children under 13 must obtain verifiable parental consent before collecting any personal information, including persistent identifiers like IP addresses and device IDs, which can be used to track a child's online activity.

The FTC alleges that Club Penguin Island gathered millions of such identifiers from millions of children, systematically bypassing these critical privacy protections.

Club Penguin Island, a successor to the highly popular original Club Penguin, allowed players to customize avatars, explore virtual worlds, and interact with others.

Despite its appeal to a young audience, the FTC contends that the app's data collection practices fell short of legal requirements. The game was ultimately shut down in 2018, but the legal repercussions for its alleged data handling are just now culminating.

The proposed settlement goes beyond merely financial penalties.

It requires Disney not only to pay the $3 million fine but also to destroy any personal information collected in violation of COPPA. Furthermore, Disney must implement a comprehensive privacy program designed to ensure future compliance with COPPA and similar privacy regulations, a clear signal that the FTC expects robust and proactive measures to protect children.

This enforcement action serves as a crucial reminder for all digital platforms catering to children: the responsibility to protect young users' privacy is paramount.

As children increasingly engage with online content, the role of regulators like the FTC in holding companies accountable for their data practices becomes ever more vital. The proposed fine against Disney underscores the ongoing commitment to ensuring a safer digital environment for the youngest internet users.