Disney agrees to $10 million settlement for collecting data from children

The Federal Trade Commission (FTC) on Tuesday announced Disney has agreed to pay $10 million to settle allegations that it collected personal data from children watching YouTube videos without parental notification or consent.

Following a referral from the FTC, the Department of Justice filed a complaint alleging that Disney broke the Children’s Online Privacy Protection Rule (COPPA) by neglecting to label a “significant number” of videos it places on YouTube as “Made for Kids.”

Targeted advertising is disabled on videos designated as intended for children. Disney’s actions allowed the children to be subjected to targeted advertising based on personal data collected without parental notice or consent, the complaint says. 

The agency’s proposed order will require changes to how Disney designates videos directed to children on the streaming service and will push YouTube to begin using age assurance technologies, the FTC said in a press release.

The COPPA Rule was updated in January to require parents to opt in to third-party advertising to children. The rule mandates that websites and online services get verifiable parental consent before collecting, using, or sharing personal information from children under age 13.

Disney has uploaded tens of thousands of videos to more than 1,250 YouTube channels since 2020, according to the complaint. Those posted to just three dozen Disney channels drew 1.2 billion views in the U.S. over a three-month period of 2020 alone. 

Many of these videos were not properly labeled as being for children. The entertainment giant profited handsomely from the practice, the complaint says.

Disney receives part of YouTube’s advertising revenue from promotions placed on the videos. It also places its own ads on a subset of videos.

In November 2019, YouTube told Disney it was required to alert it if content uploaded was directed at children to ensure it was complying with COPPA. YouTube determined what advertising practices would be allowed depending on whether or not Disney labeled it as content made for children. 

Videos Disney posted with a “Not Made for Kids” label included clips of Mickey Mouse cartoons and snippets from child-directed movies such as Frozen, Encanto, Moana, Cars, Tangled, Ratatouille and Toy Story, the complaint says.

YouTube told Disney that it was failing to label the videos correctly as early as June 2020, the complaint says, but Disney failed to fix the problem.

A spokesperson for Disney did not respond to a request for comment.

“This case underscores the FTC’s commitment to enforcing COPPA, which was enacted by Congress to ensure that parents, not companies like Disney, make decisions about the collection and use of their children’s personal information online,” FTC Chairman Andrew Ferguson said in a prepared statement.

In addition to the $10 million fine, the proposed settlement requires Disney to begin alerting parents before collecting personal data from children under age 13 and obtain their consent in accordance with COPPA.

Disney is also required to start a program to ensure that videos it uploads to YouTube are properly designated as intended for kids. That provision of the order will be struck if YouTube puts its own age assurance technologies in place, however.