Previously, the defunct Musical.ly app enabled users to create short videos lip-syncing to music and share those videos with other users.
While the FTC voted 5-0 to accept the settlement with TikTok that resulted in the $5.7 million fine, the commission's two Democrats said in a joint statement that the FTC should have held company executives personally accountable.
The Federal Trade Commission announced today that it had reached a settlement with TikTok, formerly known as the tween-friendly app Musical.ly, over charges that the popular app illegally collected information on users below the age of 13.
But, despite sharing all of that information, the app didn't first ask for the consent of the children's parents; something that's always been required under the Children's Online Privacy Protection Act (COPPA).
Following their investigation the FTC said it had "uncovered disturbing practices", including collecting and exposing the location of young people.
The developers knew a "significant percentage" of users were under 13 but didn't change their ways even after "thousands of complaints", the FTC said.
In addition to the hefty fine, the settlement with FTC also requires the app to maintain an age gate on the app. It also showed profile information and bios for private accounts and allowed direct messages to be sent, according to the FTC complaint, filed in the U.S. District Court for the Central District of California. The FTC said the app did not ask for a parent's permission to collect data on users.
"We care deeply about the safety and privacy of our users", TikTok said.
"This record penalty should be a reminder to all online services and websites that target children: We take enforcement of COPPA very seriously, and we will not tolerate companies that flagrantly ignore the law", he added.
User accounts were public by default, and adults were able to contact users, regardless of their age.
Brendan Gahan, founder of social media marketing agency Epic Signal, says TikTok has been generating a lot excitement in the advertising industry.
TikTok told the BBC it did not plan to provide the under-13 experience to users outside of the United States, and instead would continue to limit use to those 13 and above. TikTok is the popular and controversial Chinese app which is basically a social video app.
Children's advocates have pushed the FTC to investigate whether other companies, including Google's YouTube, are similarly violating children's online privacy.
Obligations include being upfront in how children's data is collected and used, as well as a mechanism by which to inform parents their child is using the service, and obtain their consent.