WASHINGTON DC: Disney has agreed to pay US$10mil (RM42.32mil) to settle a lawsuit from the Federal Trade Commission (FTC), accusing the entertainment giant of violating federal children’s privacy laws by improperly labelling child-directed content on YouTube and enabling targeted advertising without parental consent, media outlets reported.

“Our order penalises 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,” FTC Chairman Andrew N. Ferguson said in a statement to CBS News.

In a statement to the Hollywood Reporter, a Disney spokesperson noted the settlement doesn’t involve Disney-owned and operated platforms and is “limited to the distribution of some of our content (put on YouTube).”

“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,” the spokesperson stated.

The 16-page complaint, filed in the US District Court for the Central District of California, accused Disney Worldwide Services, Inc. and Disney Entertainment Operations LLC of failing to comply with the Children’s Online Privacy Protection Act (COPPA) and the FTC Act. The government wants the court to stop Disney’s actions, fine the company and provide other appropriate remedies.

Improper labeling of child-directed content

The complaint accused Disney of failing to properly mark thousands of videos as “Made for Kids” on YouTube. According to the FTC, Disney uploaded child-directed videos to channels labelled “Not Made for Kids,” allowing YouTube to collect personal data from children and serve them targeted ads – practices that are prohibited under COPPA without verifiable parental consent.

The complaint cites examples from popular Disney channels such as Pixar, Disney Plus, Walt Disney Studios and Disney on Ice, where videos featuring characters from Frozen, Toy Story, Moana and Cars were claimed to have been mislabelled. In some cases, nearly identical videos were marked differently depending on the channel, leading to inconsistent protections for young viewers, the lawsuit says.

YouTube flagged the issue in 2020

The FTC says YouTube notified Disney as early as June 2020 that it had reclassified more than 300 videos from Not Made for Kids to Made for Kids due to their child-directed nature. Despite this, Disney was accused of continuing its practice of defaulting to channel-level designations rather than evaluating individual videos, according to the lawsuit.

Targeted ads and data collection

The lawsuit also accused Disney of benefiting from YouTube’s ad placements but also ran its own targeted ad campaigns on mislabelled videos. At least 12 ad campaigns with more than 350,000 impressions were run on Made for Kids channels where videos were improperly marked as Not Made for Kids, the suit claims.

The practices, the DOJ argued, allowed for the unauthorised collection of personal information from children, including persistent identifiers used for tracking across websites. – cleveland.com/Tribune News Service