Disney agrees to pay $10 million fine for collecting data on kids, FTC says

The Walt Disney Co. agreed to a $10 million settlement for illegally collecting personal data on children, according to a Tuesday statement from the Federal Trade Commission. Disney allegedly violated the Children’s Online Privacy Protection Rule, or COPPA rule, a federal law that bars companies from collecting data on children under the age of 13 without parental notification or consent.

Disney failed to label child-directed content on YouTube as “Made for Kids,” which allowed YouTube to collect data from the audience of underage viewers. Disney mislabeled over 300 videos featuring characters and music from movies like The Incredibles, Coco, Toy Story, and Frozen, along with other Mickey Mouse content. YouTube informed Disney of its improper designations in 2020, but the company continued to post mislabeled content, the FTC said.

The mislabeling allowed child viewers to be exposed to even more age inappropriate content from YouTube’s autoplay feature suggesting similar content designed for older audiences. YouTube used the illegally collected personal data to target advertising to child viewers, the FTC claimed. Disney received a portion of the revenue generated by targeted ads with its content, the FTC added.

FTC Chairman Andrew Ferguson described the settlement on Tuesday as a win for parents. Protecting kids is more important than advertising revenue, he said. Parents will no longer have to worry about their children being illegally surveilled or viewing age-inappropriate content, Ferguson added.

What kind of penalties will Disney face? Beyond the $10 million civil penalty for violating COPPA, the entertainment giant must establish a system for reviewing and designating YouTube content. The FTC included a unique, forward-looking provision allowing Disney to forgo the child content reviews, should YouTube establish effective age assurance technologies of its own. A judge still needs to formally approve the proposed remedies that both parties already agreed to.

Dig deeper: Read my previous report on the FTC’s crackdown on pornographic websites for turning a blind eye to child pornography.