Microsoft eats $20 million FTC fine for violating kids' privacy on Xbox Live, admits no wrongdoing and promises not to do it again
Microsoft has agreed to pay a $20 million fine to the US Federal Trade Commission to settle charges that it violated the Children’s Online Privacy Protection Act (COPPA) by collecting the personal information of minors who signed up to the Xbox gaming service without notifying their parents or gaining parental consent.
Unlike PC games, which typically don't ask for much more than a functional internet connection, Xbox consoles require an Xbox Live account to play online. Basic accounts are free to set up, but of course you have to enter all sorts of personal information in the process, including your full name, address, phone number, and all that sort of thing. There are different types of accounts for different age groups, including Child accounts, which are restricted accounts affiliated with specific Adult accounts for people under the age of 13.
The problem for Microsoft, according to the FTC, is that until late 2021 it required users to enter their personal information even if they were under the age of 13. The signup process also required users, including children, to agree to Microsoft's advertising policy and terms of service, «which until 2019 included a pre-checked box allowing Microsoft to send promotional messages and to share user data with advertisers.»
It wasn't until after this point that a parent had to become involved in the process to complete the account creation and enable the child to have their own account—but in cases where the parent did not complete the process, the FTC said that from 2015-2020, Microsoft retained the data collected from the incomplete signup process anyway.
Under the terms of the proposed settlement, Microsoft will pay a $20 million fine and make a number of changes to its
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