Xanga to Pay $1 Million to Settle Child-Privacy Case

The Federal Trade Commission on Thursday announced its largest-ever settlement involving the Children Online Privacy Protection Act.

New York-based Xanga.com and its principals, Marc Ginsburg and John Hiler, will pay a $1 million civil penalty to settle accusations that the social-networking Web site collected, used and disclosed personal information from children under the age of 13 without notifying and obtaining parental consent first, according to the FTC.

The complaint charges that the defendants knew they were collecting and disclosing personal information from children under 13 because over the past five years, the site allowed 1.7 million visitors to create Xanga accounts after they provided a birth date indicating they were under that age, the FTC said.

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The company, which in 2005 had about 25 million registered accounts, also failed to notify the children's parents of their information practices or provide the parents with access to and control over their children's information, according to the FTC.

"COPPA requires all commercial Web sites, including operators of social networking sites like Xanga, to give parents notice and obtain their consent before collecting personal information from kids they know are under 13," FTC Chairman Deborah Platt Majoras said in a statement. "A million-dollar penalty should make that obligation crystal clear."

John Hiler, Xanga.com's chief executive, said the company has "instituted a stronger, more comprehensive safety and compliance program."

Xanga's new program includes personnel whose sole responsibility is to act upon all account deletion requests from parents, creating a system that allows users to flag others who are underage or are posting material in violation of Xanga's terms of service, and creating a ratings system for user-generated content.

Xanga also does not allow instant messaging and chat, or allow profile searches based on sex, age or gender, according to the company.

The FTC consent order does not constitute an admission of guilt. The order does require Xanga to delete personal information collected and maintained by the site that violated COPPA, and to provide links on some of their sites to FTC consumer education materials for the next five years.

Other social networking sites include News Corp.'s (NWS) MySpace, which has about 108 million users, and Facebook, with fewer than 10 million.

Facebook had its own controversy this week when many users threatened to boycott the site after it began delivering automated, customized alerts known as News Feeds about users' closest friends, classmates and colleagues.

Shares of News Corp. fell 15 cents to close at $19.38 on the New York Stock Exchange.

FOXNews.com and MySpace.com are both owned and operated by News Corporation.