Disney Pays $10M in FTC Settlement

The company resolves a federal case over how it improperly labeled children’s videos on YouTube.

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The Walt Disney Company has agreed to pay $10 million in an FTC settlement ending a federal lawsuit over how it handled children’s privacy on YouTube. The case was brought by the Federal Trade Commission and centered on videos Disney uploaded to the platform, mostly during the early days of the COVID-19 pandemic.

The settlement is notable because it is the first known instance in which a content provider on YouTube, rather than the platform itself, has faced direct consequences from the FTC for privacy violations involving children. The move could signal a wider push by regulators to hold companies accountable for how their videos are labeled and distributed on sites they do not control.

The FTC alleged that Disney failed to mark certain videos as being intended for children. By not applying that label, the videos were automatically made available for targeted advertising, a practice that is tightly restricted under the Children’s Online Privacy Protection Act, a law passed in 1998. COPPA requires that companies get parental permission before collecting data from children under 13, which the government said did not happen in this case.

Most of the videos that sparked the complaint were storytime clips featuring celebrities reading books to kids. These recordings were shared on YouTube as part of Disney’s outreach during the pandemic, when families were largely confined to their homes. Although the company maintained that the issue stemmed from an administrative mistake, it acknowledged the error and agreed to settle rather than fight the matter in court.

The order also requires Disney to create an “Audience Designation” program, which will ensure all future uploads go through an internal review before being made public. Disney already had systems in place to comply with privacy rules on YouTube, but the company said it would now expand those processes to avoid repeat issues.

Disney stressed that the videos in question represent only a very small fraction of the content it uploads to YouTube. A spokesperson said the company takes children’s safety seriously and emphasized that the settlement does not involve Disney-owned platforms, only certain material shared on YouTube. The spokesperson also said Disney has a long history of following privacy laws and would continue investing in tools to maintain those standards.

The FTC did not provide a public comment on the case, and YouTube declined to discuss it as well. Still, the case adds to a growing record of penalties tied to children’s online privacy. YouTube itself has previously been fined hundreds of millions of dollars over the same law. In 2019, Google and YouTube paid $170 million to resolve a major case involving similar concerns. Just last month, YouTube agreed to a $30 million settlement in another children’s privacy lawsuit.

Other major tech and gaming companies have also been hit with large fines. In 2022, Epic Games, the maker of Fortnite, agreed to pay $275 million after being accused of collecting data from children without proper consent. TikTok, Microsoft, and others have faced their own COPPA-related penalties in recent years.

The larger issue continues to be how platforms and publishers verify the age of viewers online. With millions of videos uploaded every day, mistakes can easily happen, and enforcing consistent safeguards has proven difficult. Regulators have made clear, however, that companies cannot ignore the requirements of the law, no matter how complicated compliance may be.

Advocates for children’s privacy have pressed lawmakers to pass stronger rules for age verification. While some states have adopted their own measures, these efforts often run into legal challenges. Earlier this year, the Supreme Court upheld a ruling tied to online age checks, which renewed calls for a federal standard. One bill, the Kids Online Safety Act, has been reintroduced in Congress but has yet to pass.

Meanwhile, YouTube has been developing new ways to test age estimation tools for logged-in users. Its leaders have acknowledged that keeping young people safe online is ultimately the platform’s responsibility, though content providers like Disney are now also being held to account.

The FTC settlement points to how companies are under increasing pressure to manage not only their own platforms but also the way their content is shared elsewhere. While the $10 million fine represents a small figure for a company of Disney’s size, the agreement sends a clear message that regulators expect stronger oversight in protecting children’s privacy online.

Sources:

Disney will pay $10M to settle children’s privacy lawsuit with FTC

Disney to Pay $10 Million to Settle FTC Allegations the Company Enabled the Unlawful Collection of Children’s Personal Data