Disney Fined Millions for Alleged Child Privacy Violations

The Justice Department announced on Tuesday that it had resolved a case against Disney Worldwide Services Inc. and Disney Entertainment Operations LLC. A federal court has ordered Disney to pay $10 million in civil penalties to resolve Federal Trade Commission allegations that Disney violated the Children’s Online Privacy Protection Act (COPPA).

After an investigation by the Federal Trade Commission (FTC), it was alleged that Disney’s YouTube channel was knowingly collecting user information from children under 13. The YouTube algorithm tracks what videos users watch and shows ads based on activity, depending on the video’s classification. However, by law, clear parental consent is required before any data is gathered or used for targeted advertising at children.

Bluey and Bingo are super excited when Dad brings out Unicorse!

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A complaint was filed in the U.S. District Court for the Central District of California alleging that Disney had failed to label kid-directed videos on the platform, in direct violation of COPPA. The Justice Department notes that Disney’s YouTube content generates billions of views. This means that improperly classified kid-directed content can generate substantial advertising revenue.

The federal government becomes involved when revenue is generated from marketing to children without parental involvement or consent.

COPPA Explained

COPPA was established in 1998 and went into effect in 2000. Framed as a measure for consumer protection, it regulates data collection in regard to children. Since websites are able to track user preferences and locations without an email or knowingly shared information, COPPA is designed to limit what information is gathered, and allow parents to review or delete their children’s information.

The law covers online content like games, streaming platforms (i.e.: YouTube), and apps. By failing to identify videos directed at children, the Department of Justice claims Disney was able to build ad profiles on them.

YouTube specifically created the “Made for Kids” category to comply with COPPA. When an account uploads a video, it’s asked if the video is for children. Alternatively, entire channels can be classified as for kids. The user is responsible for classifying the video or channel, and if it is for kids YouTube turns off targeted advertising and limits data collection.

A screenshot of the YouTube logo – YouTube, Major Motions

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The Department of Justice alleges that Disney failed to take those measures.

In a press release, Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division said, “The Justice Department is firmly devoted to ensuring parents have a say in how their children’s information is collected and used.” He added, “The Department will take swift action to root out any unlawful infringement on parents’ rights to protect their children’s privacy.”

Violations of COPPA can result in significant civil penalties and long-term compliance obligations.

Broader Implications

In addition to the $10 million fine, the court order requires Disney to create a program ensuring that it won’t violate COPPA on YouTube in the future. The statement also notes that Disney is barred “from operating on YouTube in a manner that violates COPPA.” Essentially, it will be under increased scrutiny.

Mickey and friends from Mickey Mouse Clubhouse – Disney+

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By settling, Disney is not legally admitting any wrongdoing. However, it’s clear that children’s privacy will remain a priority for the federal government. Ultimately, Disney will serve as a cautionary tale for all content creators working in children’s entertainment. As the digital ecosystem evolves, the fact remains that even major companies are not immune from enforcement.

Do you think Disney acted deliberately? Let us know in the comments!

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