Disney $10 million FTC settlement was disclosed following the Federal Trade Commission’s finding that the company failed to accurately indicate children’s videos on YouTube, allowing data from underage viewers to be collected and utilized for targeted ads.
Disney $10 million FTC settlement explained
The Federal Trade Commission (FTC) has authorized Disney to pay a $10 million civil penalty for failing to comply with the federal children’s privacy law. The agency has charged Disney with failing to label certain videos on YouTube as “Made for Kids.”.
The Federal Trade Commission building in Washington, D.C.
Based on the FTC complaint, this misclassification provided an opportunity for collecting data from viewers younger than 13. Such information was used in targeted advertising, which violates the Children’s Online Privacy Protection Act (COPPA) directly. Disney is compelled to develop and implement a new system to properly label all its videos on YouTube accurately.
Disney COPPA violation and mislabeling of videos
The FTC reported that YouTube notified Disney in June 2020 that approximately 300 videos were mislabeled. The videos included hit movies such as The Incredibles, Toy Story, Frozen, Coco, and Tangled. YouTube had to reclassify the content itself.
YouTube app displayed on a mobile device.
Despite the notice, Disney apparently continued posting children’s content on “Not Made for Kids” channels. The complaint alleged the company was relying on channel-level labels and not reviewing individual videos, which led to repeated mislabeling.
To understand how YouTube’s COPPA compliance system works — including disabled features and data protection mechanisms for kid-marked content — the following official explainer helps illustrate what went wrong in Disney’s case:
Made for Kids mislabeling Disney case
The FTC complaint listed that Disney uploaded child-directed videos on a variety of its YouTube channels. These included Disney Channel, Disney Junior, Pixar Cars, Mickey Mouse, Radio Disney, Disney Music, and countless more. The majority of the videos comprised cartoons, sing-alongs, and story times for kids.
Disney characters named in the FTC complaint.
Since these videos were incorrectly labeled, YouTube collected children’s personal information. Targeted advertisements were also enabled on these videos. Disney received revenues from YouTube’s shared ad program as well as directly selling ads, as reported.
FTC kids’ data settlement terms
Disney must pay $10 million to the FTC under the terms of the settlement. Disney also must create an Audience Designation Program to accurately label its YouTube videos.
A child watching online cartoons on a tablet.
The settlement also paves the way for YouTube to use age assurance technology. This would allow the site to directly ascertain users’ ages, instead of depending on companies to tag each video as such.
FTC Chairman Andrew Ferguson said, “Our order holds Disney accountable for its exploitation of parents’ trust and opens the door to safeguarding children online.”
Disney’s response to the settlement
Disney reaffirmed in a statement that it is committed to protecting the privacy of children. The firm reaffirmed that the agreement involved only the delivery of content on YouTube and not its own digital services.
Disney also stated, “Supporting the well-being and safety of children and families is at our core. Disney has a long history of complying with children’s privacy legislation and will continue to invest in tools to stay ahead in this space.”
Previous enforcement and industry context
This is not the first action the FTC has taken against children’s data collection on YouTube. In 2019, YouTube consented to pay $170 million to settle claims it had gathered data on children without parents’ consent.
As part of that prior agreement, YouTube required content producers to declare if their videos were “Made for Kids.” The Disney FTC complaint stated that even with such requirements, the corporation had not been playing by the rules in the same way every time.
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Market outlook after Disney $10 million FTC settlement
Disney $10 million FTC settlement could have repercussions on how entertainment companies manage child-directed content on third-party platforms. Since advertisement money is tied to children’s videos, good compliance will still be a requirement.
The regulators are also tasked with improving COPPA enforcement. The settlement suggests that the FTC will continue to monitor firms that distribute children’s content online. For Disney, the new Audience Designation Program can improve its compliance process while keeping its business presence on YouTube.
Industry commentators observe that the application of age assurance technology could potentially change the way platforms deal with child data. If adopted, the system would reduce reliance on human labeling, lowering the likelihood of offenses similar to the Disney COPPA violation incident.
