• by Wendy Davis  @wendyndavis, September 11, 2006

Social networking site Xanga.com has agreed to pay $1 million to settle charges that it collected personal data about children under the age of 13 and used the information to send them targeted ads, in violation of the 1998 Children's Online Privacy Protection Act.

The FTC disclosed both the complaint against Xanga and the settlement late last week. In its complaint, the FTC charged Xanga with creating 1.7 million accounts since 2001 for users who reported they were under 13 when they registered at the site. "For each of these accounts, the defendants collected, used, and disclosed personal information from children under age 13," stated the complaint. "After collecting dates of birth from children indicating that they are under 13, the defendants marketed, and in at least two instances sold, targeted banner ad space on Xanga.com to advertisers based on the personal information, including age, location, and sex, provided by such children."

The federal COPPA law prohibits sites from marketers from gathering personal information from children under 13 without their parents' permission.

Xanga.com CEO John Hiler said in a statement that the site has implemented new safeguards to protect children's privacy. "Xanga has long been committed to making its site safer for its members. When these issues came to our attention, we instituted a stronger, more comprehensive safety and compliance program," Hiler said in a statement.

In addition to the $1 million fine--the largest ever imposed by the FTC for a COPPA violation--Xanga agreed to comply with COPPA's requirements and make a variety of other changes to its site. Among other revisions, Xanga will adopt the best practices recommendations of the Children's Advertising Review Unit of the Better Business Bureau, and add staff to delete accounts at the request of parents. In addition, Xanga intends to create a ratings system for its user-generated content, modeled after the movie and video game industries.