A federal judge on Tuesday signed off on a settlement that will cost The Walt Disney Company $10 million after regulators said the studio mislabeled hundreds of kids' YouTube videos, letting the platform scoop up young viewers' data and serve them targeted ads. The order also blocks Disney from operating on YouTube in any way that violates federal child-privacy law and requires the company to put a video review program in place to make sure uploads are correctly tagged.
According to the Department of Justice, the stipulated order resolves a case referred by the Federal Trade Commission and imposes a $10 million civil penalty on Disney Worldwide Services Inc. and Disney Entertainment Operations LLC. The department said the order bars Disney from operating on YouTube in a manner that violates the Children’s Online Privacy Protection Act, or COPPA, and requires the company to create a program to ensure it complies with that law going forward.
In its complaint, the Federal Trade Commission alleged that Disney routinely marked entire channels as "Not Made for Kids" instead of correctly tagging individual videos. That default setting allegedly allowed YouTube to collect personal information from viewers under 13 and deliver personalized ads. The FTC said YouTube changed the designations on more than 300 Disney videos in mid-2020, but Disney continued using a channel-level default that left child-directed uploads mislabeled. Examples included clips and music from The Incredibles, Toy Story, Frozen and Mickey Mouse.
What the settlement requires
Under the order Disney must pay the $10 million civil penalty, comply with COPPA notice and parental-consent rules when collecting children’s personal information, and set up a review program to decide whether videos posted to YouTube should be labeled as "Made for Kids," according to the Department of Justice. The order also prohibits Disney from acting in ways that would permit unlawful data collection from children on YouTube.
In plain terms, Disney is now on a legal hook not just for what it uploads, but for how it labels those uploads when kids are watching.
Disney's response
Disney told CNBC that "Supporting the well-being and safety of kids and families is at the heart of what we do," and said the settlement applies to some content distributed on YouTube, not to Disney-owned and operated digital platforms. The company said it remains committed to privacy compliance and to investing in tools that help protect children's data, according to CNBC.
Why parents should care
Regulators say a mislabeled video is not just a technical glitch. It can expose children to personalized ads and features such as autoplay that are turned off for content correctly tagged as "Made for Kids." An alert from the Federal Trade Commission advises parents to review privacy settings, consider YouTube Kids for younger viewers, and report suspected COPPA violations to the agency.
For parents who thought the worst part of kids' YouTube time was another loop of the same Frozen song, the fine print around labeling turns out to matter just as much.
A pattern of enforcement
This Disney case follows earlier high-profile COPPA actions. In 2019, Google and YouTube agreed to a record $170 million settlement after regulators alleged similar data collection from child-directed channels, and other companies have faced scrutiny in recent years, underscoring stepped-up enforcement of children’s online privacy rules, according to CNBC. Consumer advocates and regulators have pushed for stronger age-assurance tools and clearer labeling so that kids' data is not collected without parental consent.
The Justice Department and the FTC say they will monitor compliance as platforms and creators update labeling and safety practices.
