Is Disney Paying $10 Million for Violating Children's Privacy Laws?

The Walt Disney Company has agreed to pay $10 million (£7.4 million) to settle allegations of violating children's privacy laws by failing to label certain YouTube videos as made for children. This oversight allowed targeted advertising to reach children without parental consent, raising concerns under the Children's Online Privacy Protection Act (COPPA). The settlement, announced by the US Federal Trade Commission (FTC) and the Department of Justice, also mandates Disney to implement a compliance programme for children's data protection.

Last updated: 10 October 2023 (BST)

What’s happening now

The Walt Disney Company is currently finalising a $10 million settlement with US regulators to resolve claims related to its failure to appropriately label YouTube videos aimed at children. This situation is particularly relevant to UK audiences, given the growing scrutiny over children's online privacy and data protection laws worldwide. The settlement follows a broader trend of regulatory actions targeting companies that collect data from minors without proper consent, a critical issue given the rise in digital content consumption among children.

Key takeaways

• Disney will pay $10 million to settle claims of violating children's privacy laws.
• The settlement stems from allegations that Disney failed to label certain YouTube videos as made for children.
• A compliance programme will be established to adhere to children's data protection regulations.

Timeline: how we got here

The following timeline outlines key events leading up to the settlement:

• June 2020: Disney reportedly became aware of its failure to properly label children's videos on YouTube.
• September 2023: Disney reached an agreement with the FTC regarding the settlement.
• October 2023: The settlement was publicly announced, detailing Disney's financial penalty and compliance requirements.

What’s new vs what’s known

New today/this week

The most recent development involves the formal announcement of the settlement and the specifics of Disney's obligations moving forward, including the creation of a compliance programme for handling children's data.

What was already established

Previously, the FTC had already settled with YouTube's parent company, Google, over similar issues in 2019, which led to the requirement for content creators to label their videos aimed at children appropriately. The ongoing concern is that Disney has failed to comply with these established regulations.

Impact for the UK

Consumers and households

For UK consumers, this settlement highlights the importance of data protection, especially regarding children's online content. With parents increasingly aware of privacy issues, this case may lead to stricter scrutiny of companies operating in the UK who handle children's data.

Businesses and jobs

Businesses that produce children's content must now be particularly vigilant about compliance with data protection laws. This settlement may prompt companies to reassess their content strategies and data collection practices to avoid similar legal challenges.

Policy and regulation

This case reinforces the need for robust compliance with the Children’s Online Privacy Protection Act (COPPA) in the US, which may influence similar regulatory frameworks in the UK as authorities continue to prioritise children's online safety and privacy. Upcoming consultations and policy discussions in the UK could be shaped by this case.

Numbers that matter

• £7.4 million: The amount Disney has agreed to pay to settle the claims.
• 1,250: Number of YouTube channels through which Disney uploaded videos since 2020.
• 300+: The number of videos that YouTube allegedly had to relabel due to Disney's failure to comply with COPPA.

Definitions and jargon buster

• COPPA: Children's Online Privacy Protection Act, a US law that requires parental consent before collecting personal data from children under 13.
• FTC: Federal Trade Commission, a US government agency that protects consumers and ensures a strong competitive market.
• Targeted advertising: Advertising directed to specific audiences based on collected data, often without their explicit consent.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, Disney will finalize the settlement terms and begin implementing the required compliance programme. Parents should remain vigilant about their children’s online activity and privacy settings.

Medium term (1–6 months)

As Disney rolls out its compliance measures, other companies producing children's content may follow suit to avoid similar scrutiny. Regulatory bodies may also consider additional actions or guidelines for children's content creators.

Signals to watch

• Updates from Disney on the implementation of its compliance programme.
• Further regulatory actions from the FTC or similar bodies regarding children's online privacy.
• Changes in YouTube's policies or practices related to children's content and advertising.

Practical guidance

Do

• Ensure that all children's content is clearly labelled and compliant with relevant regulations.
• Educate parents about the importance of checking privacy settings for their children's online accounts.
• Stay informed about changes in data protection laws and regulations.

Don’t

• Don't overlook the significance of parental consent when collecting data from children.
• Don't assume that compliance is optional; staying compliant is crucial to avoid legal repercussions.
• Don't ignore feedback from regulatory bodies regarding content practices.

Checklist

• Verify all children's videos are correctly labelled on platforms like YouTube.
• Implement a clear consent process for data collection from children.
• Review and update privacy policies regularly to ensure compliance.
• Provide training for staff on children’s data protection laws.
• Monitor regulatory updates that could affect children’s content.

Risks, caveats, and uncertainties

While the settlement outlines specific obligations for Disney, there are uncertainties regarding how effectively the compliance programme will be implemented and enforced. Future regulatory changes could also impact the landscape of children's data protection, making it essential for companies to remain adaptable and responsive. Additionally, the extent of the impact on Disney's operations and financials remains to be seen, particularly given the popularity of its content among younger audiences.

Bottom line

The settlement between Disney and US regulators underscores the critical importance of children's online privacy and presents a cautionary tale for other content creators. As regulators tighten their grip on data collection practices, companies must proactively comply with existing laws to safeguard children's information, while parents should remain vigilant about their children's online interactions.

FAQs

What is the significance of Disney's $10 million settlement?

The $10 million settlement highlights serious breaches of children's privacy laws by Disney, particularly relating to targeted advertising on YouTube without parental consent, raising awareness about data protection issues.

How does COPPA affect content creators?

COPPA requires that content creators notify parents and obtain consent before collecting personal data from children under 13, ensuring children's online safety and privacy.

What should parents do to protect their children's online privacy?

Parents should regularly check their children's online accounts, ensure privacy settings are correctly configured, and stay informed about the content their children are accessing.