I was marked wrong for "My family is VERY happy" (not "really happy"). Have reported.
"Really" and "very" are synonyms in many contexts and seem to be here. Also reported.
I think most people would say "My family ARE really happy."
Common usage trumps both duo and any dictionary.
Like David Crystal says, "There are no common mistakes in language, if it's common, it's not a mistake."
He's a really interesting guy and well worth looking up. https://en.wikipedia.org/wiki/David_Crystal
In British English using plural forms for groups is completely acceptable and this is common usage. In America, less so. But it should still be an acceptable answer.
I have the latest version of the Oxford English Dictionary as an app. As much as I love you Duolingo, I believe that this holds higher authority than you hold.. regarding what is good English, and what is not. In the entry for "family" it says against the first given meaning "[treated as singular or plural]" If you accept the authority of this dictionary, then to be consistent, I think that you should keep your current answer "My family IS really happy" but also accept my answer (less prevalently used as it may be): My family ARE really happy.
I still like to try to treat collective-type nouns as plural when it doesn't sound silly. Plurals are disappearing.