The Walt Disney Company (NYSE: DIS) has agreed to pay a $10 million fine to resolve a lawsuit filed by the Federal Trade Commission (FTC) over improper data collection practices involving children under 13 years old. The settlement comes after the FTC alleged that Disney allowed personal information from young children to be collected through certain YouTube videos without the necessary parental consent, violating federal privacy laws designed to protect children online.
The issue centers around the Children’s Online Privacy Protection Act (COPPA), a law enacted in 1998 to safeguard children’s privacy on digital platforms. COPPA requires that websites and apps directed at children under 13 obtain verifiable parental consent before collecting any personal data. The FTC’s complaint against Disney focused on how the company failed to correctly label some videos it uploaded to YouTube as being “made for kids.” Because these videos were not properly designated, they were treated as general audience content, which allowed targeted advertising and data collection on viewers, many of whom were children under 13.
According to the FTC, the mislabeled videos included content featuring characters from popular Disney movies like “Coco,” “Frozen,” and “Toy Story,” as well as music from “The Incredibles.” The misclassification not only exposed these videos to targeted ads but also potentially subjected young viewers to age-inappropriate YouTube features.
This is significant because YouTube requires content creators to identify videos intended for children under 13 properly, to ensure compliance with COPPA rules. The law mandates that when content is child-directed, tracking and advertising practices must be tightly controlled, especially with parental awareness and consent. The failure to categorize these videos correctly was deemed an administrative error by Disney, but one with serious legal consequences.
Disney’s settlement with the FTC includes more than just the fine. The company must now implement a formal system called the “Audience Designation” program. This procedure will ensure that videos uploaded to YouTube are reviewed more rigorously to confirm whether they should be classified as child-directed content. Disney already maintains a privacy compliance program related to children’s content on YouTube, but the FTC requires the company to strengthen these measures to avoid similar violations in the future.
A spokesperson for Disney emphasized that the settlement only applies to some content distributed on YouTube rather than Disney’s own digital platforms. The company reaffirmed its long-standing commitment to protecting children’s privacy and said it would continue to invest in tools and processes that uphold high standards of compliance with privacy laws.
This case marks an important precedent as it is the first known instance of a YouTube content provider settling with the FTC over children’s privacy violations since YouTube itself and its parent company Google agreed to a landmark $170 million settlement in 2019 for similar COPPA violations. It highlights the scrutiny that third-party content creators face when their work reaches young audiences via popular platforms.
The FTC’s action against Disney aligns with broader efforts to enforce COPPA across digital media outlets. Other major companies like Epic Games, TikTok, and Microsoft have faced fines related to children’s privacy violations in recent years. Online platforms and content producers continue grappling with the challenge of accurate age verification and compliance with evolving privacy protections.
Amid growing concerns, regulatory agencies and lawmakers are exploring new ways to strengthen online age verification systems to better protect children’s data privacy. The issue has also garnered attention in the courts and Congress, where proposed legislation such as the Kids Online Safety Act seeks to address these challenges more comprehensively.
For Disney, this lawsuit serves as a reminder of the complex regulatory landscape around digital content for children. The company’s experience illustrates the risks of seemingly small compliance errors in a high-stakes environment where the safety and privacy of young audiences are increasingly a priority for regulators.
