The Federal Trade Commission alleged that from 2015 to 2020 Microsoft collected personal data from children under age 13 who signed up to its Xbox gaming system without their parents' permission and retained this information.

US fines Microsoft $20 million over child data violations, illustration photo/ Source: freepik.com

To open an account, users had to provide their first and last names, an email address, and date of birth.

The FTC said Microsoft violated a law called the Children's Online Privacy Protection Act, or COPPA.

"Our proposed order makes it easier for parents to protect their children's privacy on Xbox, and limits what information Microsoft can collect and retain about kids," said Samuel Levine, head of the FTC's Bureau of Consumer Protection.

"This action should also make it abundantly clear that kids' avatars, biometric data, and health information are not exempt from COPPA," Levine added.

The decision still needs the approval of a federal court before it can be implemented.

The FTC said Microsoft will be required to take several steps to bolster privacy protections for child users of its Xbox system.

Under the COPPA law, online services and websites aimed at kids under 13 must notify parents about the personal information they collect and obtain verifiable parental consent before collecting and using any personal information collected from children.

A spokesperson for Microsoft told AFP that Xbox was "committed to complying with the (FTC's) order" and would develop a new identity and age validation process to deliver age-appropriate experiences.