Disney to Pay $10 Million to Settle Alleged Violations of Children’s Privacy Laws

A federal court has approved a settlement in which Disney will pay $10 million in civil penalties to resolve allegations that it violated children’s privacy laws.

The case was brought by the Justice Department after the Federal Trade Commission (FTC) investigated the matter and negotiated a resolution with Disney, the Justice Department said in a Tuesday (Dec 30) press release.

The FTC said in a Wednesday (Dec. 31) press release that the complaint brought by the Justice Department alleged that Disney Worldwide Services and Disney Entertainment Operations failed to label some videos directed at children as “Made For Kids” (MFK) when uploading the videos to YouTube.

The complaint alleged that this mislabeling of the videos allowed YouTube to collect personal data from children under 13 who viewed the videos and then use that data to target advertising to children.

In this way, the complaint alleged, Disney violated the Children’s Online Privacy Protection Rule (COPPA), which requires companies to notify parents or obtain their consent before allowing personal data to be collected from children, per the release.

Disney did not immediately reply to PYMNTS’ request for comment.

In a statement provided to the Los Angeles Times in September, when the company and the FTC reached a proposed settlement, Disney said: “Supporting the well-being and safety of kids and families is at the heart of what we do … 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.”

According to the Justice Department’s Tuesday press release, the settlement bars Disney from operating on YouTube in a way that violates COPPA and requires the company to create a program to ensure it complies with that law.

“The Department will take swift action to root out any unlawful infringement on parents’ rights to protect their children’s privacy,” Brett A. Shumate, assistant attorney general of the Justice Department’s Civil Division, said in the release.

The FTC announced in September that it had reached a proposed settlement with Disney and that it had referred the complaint and proposed order to the Justice Department, which then took the complaint and proposed order to court.

FTC Chairman Andrew N. Ferguson said at the time in a press release: “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.”

In another, separate case involving COPPA, the FTC sued the operator of messaging app Sendit in September, alleging that the company harvested children’s personal data without parental consent and used deceptive tactics to drive subscription sales.