As the agency finalizes changes to its Children’s Online Privacy Protection Act (COPPA), the Federal Trade Commission reached a $1 million settlement with a celebrity fan site operator over allegations it violated the act.

Artist Arena, the operator of fan Web sites for artists like Rihanna, Justin Bieber, and Demi Lovato, violated COPPA by collecting personal information from children under the age of 13 without parental consent, according to the agency’s complaint. Visitors to sites like http://www.demilovatofanclub.net/ and http://www.bieberfever.com/ could create profiles, register to join a fan club, and sign up for newsletters.

Although the site claimed that it would not activate a child’s registration without their parent’s consent, Artist Arena’s procedures were inadequate to comply with COPPA, the FTC said.

In one example, children who registered for the Selena Gomez newsletter were told to provide a parental e-mail address so that an adult could provide the necessary consent. Although the parents received a message with a link to approve the subscription, the company had already registered the child on the site and created a profile, the agency said.

Artist Arena knowingly registered more than 25,000 children under age 13, the FTC alleged, and collected and maintained information from an additional 75,000 children who started but did not complete the registration process. The company collected information including the names, addresses, e-mail addresses, birth dates and gender of the children, according to the complaint.

In addition to the $1 million penalty, Artist Arena agreed to destroy the illegally collected information. The company is also prohibited from future violations of COPPA and agreed to place a link on its Web sites to the FTC’s guide for protecting children’s online privacy.

To read the complaint in U.S. v. Artist Arena, click here.

To read the consent decree, click here.

Why it matters: The settlement reiterates the agency’s focus on COPPA and children’s privacy even as it readies changes to COPPA. Even if the proper procedures are in place – like Artist Arena’s parental e-mail system – companies that market to children under the age of 13 should ensure that their compliance measures are functioning – unlike the defendant’s system that allows registration prior to receiving parental consent. Or, as FTC Chairman Jon Leibowitz said in a press release about the settlement, “Marketers need to know that even a bad case of Bieber Fever doesn’t excuse their legal obligation to get parental consent before collecting personal information from children. The FTC is in the process of updating COPPA to ensure that it continues to protect kids growing up in the digital age.”