Long known as a family-friendly entertainment giant with a multibillion-dollar empire built on iconic films and beloved characters, Disney has found itself at the center of a massive controversy.
Disney has agreed to pay $10 million to settle a lawsuit filed by the Federal Trade Commission (FTC) which alleged that it violated the Children’s Online Privacy Protection Rule (COPPA).
COPPA is a federal rule that protects the online privacy of children under the age of 13 by requiring websites and online services to notify parents and obtain verified consent before collecting, using, or disclosing children’s personal information.
The allegations made in the FTC’s lawsuit against Disney
The lawsuit, filed on September 2 in the U.S. District Court for the Western Division of California, accuses Disney Worldwide Services and Disney Entertainment Operations of improperly labeling children’s content on YouTube.
According to the FTC, Disney (DIS) uploaded videos on YouTube directed at children under 13 from 2020 to the present time but failed to properly identify them as “Made for Kids,” as required by YouTube’s policies and federal law.
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This mislabeling allowed for the collection of data from child viewers without parental consent, enabling targeted advertising in violation of COPPA.
The FTC noted “the amount of time viewers spent watching videos on these channels soared to over 100 million hours worldwide, with approximately 1.2 billion views in the United States alone, during three months of the early COVID-19 pandemic period of 2020.”
Image source: Getty Images
YouTube’s policy to comply with COPPA rules
In 2019, YouTube introduced a policy requiring content creators to designate whether their videos are “Made for Kids” or “Not Made for Kids,” following its own settlement with the FTC over COPPA violations.
If the entire channel is marked with one of those specific labels, all videos will automatically adopt that label unless manually changed.
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Despite YouTube notifying Disney in mid-2020 that it had reclassified over 300 of its videos from “Not Made for Kids” to “Made for Kids,” Disney allegedly continued to mislabel content, exposing children to targeted ads and, in some cases, inappropriate material through autoplay.
While YouTube provides labeling tools, content creators are responsible for ensuring all their videos are marked accurately.
Details on Disney’s settlement with the FTC
Disney stated that the settlement doesn’t involve Disney-owned and operated platforms and is limited only to the distribution of some of its YouTube content.
“Supporting the well-being and safety of kids and families is at the heart of what we do,” said a Disney spokesperson to TheStreet.
“Disney has a long tradition of embracing the highest standards of compliance with children’s privacy laws, and we remain committed to investing in the tools needed to continue being a leader in this space,” they added.
Terms of Disney’s settlement
- Pay a $10 million civil penalty.
- Must comply with COPPA requirements, including obtaining parental consent before collecting and using that data from children under 13.
- Create a program to review YouTube videos and ensure they are correctly labeled as “Made for Kids” if applicable.
“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,” said FTC Chairman Andrew N. Ferguson in a statement.
“Our order penalizes Disney’s abuse of parents’ trust, and, through a mandated video-review program, makes room for the future of protecting kids online — age assurance technology,” Freguson added.
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