Disney Pays $10 Million in FTC Children’s Privacy Settlement (2)

Walt Disney Co. will pay $10 million to the Federal Trade Commission to settle allegations that it violated a federal children’s privacy law by allowing children to be targeted with online advertising.

By failing to correctly classify videos uploaded to its YouTube channels, Disney exposed children to data tracking without obtaining the parental consent required for such tracking under the FTC’s Children’s Online Privacy Protection Rule, according to the complaint filed Tuesday by the Department of Justice.

“This case underscores the FTC’s commitment to enforcing COPPA, which was enacted by Congress to ensure that parents, not companies like Disney, make decisions about the collection and use of their children’s personal information online,” FTC Chairman Andrew Ferguson wrote in a statement.

The settlement is the first privacy enforcement action reached by the Federal Trade Commission since Ferguson took over in January.

According to the complaint, Disney failed in “some cases” to mark videos geared toward children as “Made For Kids,” a designation that YouTube uses to ensure data collection COPPA-violating data collection is turned off for children.

Google’s YouTube adopted its “Made For Kids” designation in response to a 2019 settlement with the agency for allegedly failing to obtain parental consent to collect data on kids under 13.

The settlement will require Disney to implement a compliance program to review whether its videos should be designated as “Made For Kids.” That requirement will change if YouTube adopts age assurance technologies determining the ages of users, a nod of a approval by the agency toward the emerging compliance tool.

“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,” Ferguson wrote.

The settlement’s conditional nod at how children’s safety technology might change is unusual for the agency, Cobun Zweifel-Keegan, managing director of International Association of Privacy Professionals Washington office, wrote in a message.

“Chairman Ferguson appears ready to put his thumb on the scale to at least some degree for age assurance in this context, even if it’s not yet required under federal law,” he wrote.

The settlement also highlights the “shared risks” of media companies, he said. “One company acting alone can’t eliminate all risks to children.”

The settlement doesn’t involve any Disney-owned or operated platforms, according to a company statement. “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,” a spokesperson wrote.

Axios was the first to report the settlement.