California: The Walt Disney Company has agreed to pay $10 million (£7.4 million) to resolve allegations that it violated US children’s privacy laws by failing to properly label some YouTube videos as content made for children, enabling targeted advertising and the collection of personal data without parental consent.
The settlement follows an investigation by the US Federal Trade Commission (FTC), which found that Disney did not correctly identify certain child-directed videos on YouTube, a requirement under the Children’s Online Privacy Protection Act (COPPA). As a result, children were allegedly exposed to targeted advertising and had their personal information collected without appropriate notice to parents.
Under the agreement, announced by the US Department of Justice, Disney will also establish a comprehensive compliance programme to ensure adherence to federal children’s data protection laws going forward.
Brett Shumate, assistant attorney general for the Justice Department’s civil division stated that, “The Justice Department is firmly devoted to ensuring parents have a say in how their children’s information is collected and used.”
A Disney spokesperson confirmed the company has agreed to the terms of the settlement, which were initially disclosed in September. Disney previously emphasised that the agreement applies only to the distribution of some of its content on YouTube and does not affect Disney-owned or operated digital platforms.
The settlement involves Disney Worldwide Services Inc and Disney Entertainment Operations LLC. Following a landmark 2019 settlement between the FTC and Google, YouTube began requiring content creators to label videos that are directed at children. This measure was designed to prevent targeted advertising and the collection of personal data on children’s content, practices prohibited under COPPA.
The law mandates that creators producing content for children under the age of 13 must notify parents and obtain their consent before collecting personal information. Regulators allege that Disney failed to comply with these requirements by misclassifying certain videos, many of which were uploaded during the Covid-19 pandemic.
According to the Justice Department’s complaint, filed in California, Disney has uploaded videos across more than 1,250 YouTube channels since 2020 through multiple subsidiaries. Many of these videos attracted massive audiences, with viewership surging during the early months of the pandemic.
The filing further claims that Disney was aware of issues related to the improper labelling of child-directed videos as early as June 2020. At that time, YouTube reportedly informed Disney that it had reclassified more than 300 videos, including popular titles linked to franchises such as The Incredibles, Toy Story and Frozen.
Government lawyers argued that Disney’s alleged misclassification resulted in YouTube collecting children’s personal information and serving targeted advertisements on child-directed videos on Disney’s behalf, in violation of federal law.
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