(Recasts first paragraph and adds comments from Sony executive on expected settlement of case; adds background on Sony purchase of full Sony BMG joint venture)
By Martha Graybow
NEW YORK, Dec 10 (Reuters) - Sony BMG, which is changing its name to Sony Music Entertainment, was sued on Wednesday by the U.S. government, which accused the music company of violating federal rules aimed at protecting the online privacy of children.
The music company improperly accepted registrations on its music websites from users who were under 13, without obtaining consent from their parents, according to the lawsuit filed in U.S. District Court in Manhattan.
The civil suit, which seeks unspecified monetary penalties, said Sony Music was in violation of the Children’s Online Privacy Protection Rule, which is enforced by the Federal Trade Commission. The case was brought by the U.S. Attorney’s Office in Manhattan.
A Sony BMG executive told Reuters that the litigation is in the process of being resolved, with the company agreeing to pay a fine of $1 million, to put in place a screening process that complies with the FTC rules and hire a Web compliance officer to monitor the issue.
The executive declined to be identified, saying the news of the settlement was to be officially announced by the government as early as Thursday.
The lawsuit said Sony Music’s notice of its information practices on its website did not clearly or accurately disclose how it collected and used the information.
Sony Corp (6758.T)(SNE.N), the Japanese consumer electronics company, agreed in August to buy full ownership of the Sony BMG music group, saying it would purchase Bertelsmann AG’s (BTGGg.F) 50 percent stake in their joint venture for around $900 million.
The new music company, the second biggest after Vivendi SA (VIV.PA) unit Universal, is being renamed Sony Music Entertainment and is a wholly owned unit of Sony Corp of America, Sony has said. (Reporting by Martha Graybow; editing by Jeffrey Benkoe)