According to the FTC, which levied the civil penalty against site owners Marc Ginsburg and John Hiler as well as Xanga, the fine marks the largest ever under COPPA.
The New York-based company had been accused by the FTC of using and disclosing personal information obtained from children under the age of 13 without receiving parental consent.
The company also was accused of failing to notify parents of their information gathering practices.
"COPPA requires all commercial websites, 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. "A million-dollar penalty should make that obligation crystal clear."
The fine, which is part of the terms of an FTC consent order, does not constitute an admission of guilt. Under the terms of the order, Xanga must delete personal information collected and maintained by the site in violation of COPPA. The company also will be required to provide links to FTC consumer education materials for the next five years.
Hiler said Xanga has “instituted a stronger, more comprehensive safety and compliance program.”
The company has added additional staff to handle account deletion requests from parents, Hiler said, adding that Xanga also has instituted a flagging system for users to bring underage members to the attention of the site operators.
The settlement comes in the wake of numerous Congressional hearings investigating child safety online as well as subsequent calls from legislators to do more to protect children from sexual predators on the Internet.
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