The Walt Disney Company will pay $10 million (£7.4 million) to settle claims that it violated US children’s privacy laws by failing to label certain YouTube videos as made for children, which regulators said allowed targeted advertising and the collection of children’s personal data without parental consent.
The settlement resolves an inquiry by the Federal Trade Commission into Disney’s handling of children’s data. The FTC argued that Disney’s alleged failure to correctly label some child-directed videos meant that children received targeted advertising and that their data was collected without proper notice to or consent from parents.
According to the US Department of Justice, Disney also agreed to establish a compliance program to ensure adherence to children’s data protection laws. The agreement involves Disney Worldwide Services Inc and Disney Entertainment Operations LLC, the department said on Tuesday.
Brett Shumate, an assistant attorney general in the Justice Department’s civil division, said the settlement reflects the government’s focus on giving parents control over how their children’s information is collected and used.
A Disney spokesperson confirmed that the company agreed to the terms announced in September, when the settlement with the FTC was first disclosed. Disney previously said the agreement applies only to the distribution of certain content on YouTube and does not involve Disney-owned or operated digital platforms.
The case follows changes introduced by YouTube after a 2019 settlement between the FTC and YouTube’s parent company, Google. Under those changes, content creators are required to label videos directed at children to prevent targeted advertising and the collection of personal data.
Those requirements are tied to the 1998 Children’s Online Privacy Protection Act, which bars targeted advertising on children’s content and requires creators producing content for children under 13 to notify parents and obtain consent before collecting personal information.
Regulators alleged that Disney failed to identify certain videos as made for children, many of which were uploaded during the Covid-19 pandemic. Since 2020, Disney has uploaded content to more than 1,250 YouTube channels through multiple subsidiaries, according to a Justice Department complaint filed in California. The filing said many of the videos were extremely popular, with viewership rising sharply in the early months of the pandemic.
The complaint also stated that Disney was aware of problems with mislabeling child-directed videos as early as June 2020. At that time, YouTube allegedly told Disney it had changed the labels on more than 300 videos, including content linked to The Incredibles, Toy Story, and Frozen.
Government lawyers said Disney’s alleged misclassification resulted in YouTube collecting personal information and placing targeted advertisements on child-directed videos on Disney’s behalf.
Featured image credits: Public Domain Pictures
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