Disney Faces Onslaught of Children’s Online Privacy Litigation, MDL Petition Following FTC Settlement

Disney Faces Onslaught of Children’s Online Privacy Litigation, MDL Petition Following FTC Settlement

In a dramatic turn for the entertainment giant, The Walt Disney Company is now grappling with a wave of class-action lawsuits alleging violations of children’s online privacy laws, just days after agreeing to a $10 million settlement with the Federal Trade Commission (FTC). The suits, filed in federal courts across the U.S., accuse Disney of unlawfully collecting personal data from children under 13 through kid-directed videos on YouTube, bypassing parental consent as required by the Children’s Online Privacy Protection Act (COPPA). One plaintiff has already petitioned to consolidate the cases into a multidistrict litigation (MDL) in the Southern District of New York, signaling potential for a massive coordinated battle that could expose Disney to billions in damages.

This escalation comes amid heightened scrutiny of Big Tech’s handling of children’s data, with the FTC’s settlement serving as a stark reminder of COPPA’s teeth. As parents, advocacy groups, and regulators close in, Disney’s missteps in video labeling could redefine accountability for content creators on platforms like YouTube. The cases highlight a broader trend: tech and media companies facing mounting pressure to protect young users in an era of pervasive data tracking and targeted ads.

The FTC Settlement: A $10 Million Wake-Up Call

The storm began brewing on September 2, 2025, when the FTC announced its proposed settlement with Disney Worldwide Services, Inc., and Disney Entertainment Operations LLC—two entities handling technical support and media content for the company. The agencies alleged that Disney violated COPPA by failing to properly designate certain YouTube videos as “made for kids” (MFK), allowing the unlawful collection of children’s personal information without notifying parents or obtaining verifiable consent.

COPPA, enacted in 1998 and enforced by the FTC, mandates that operators of websites or online services directed at children under 13 must seek parental approval before gathering data like names, locations, or viewing habits. This data often fuels behavioral advertising, a lucrative but privacy-invasive practice. The FTC’s complaint detailed how Disney uploaded kid-directed content—such as videos from channels like Pixar and Disney Junior—to channels labeled “not made for kids” (NMFK). This mislabeling, occurring between 2020 and 2022, exposed millions of young viewers to personalized ads and trackers from Google and third parties.

A Disney spokesperson acknowledged the issue but downplayed its scope: “This settlement does not involve Disney-owned and operated digital platforms but rather is limited to the distribution of some of our content on YouTube’s platform.” The company conceded it had erred in a blanket channel-level designation policy, despite YouTube notifying it in mid-2020 that over 300 videos had been auto-flagged as MFK. The FTC emphasized that these videos represented a “tiny amount” of Disney’s total uploads, but the violation’s impact was significant, potentially affecting hundreds of thousands of children.

Under the settlement, Disney must pay a $10 million civil penalty—the first such fine against a YouTube content provider since the FTC’s landmark $170 million action against Google and YouTube in 2019. That earlier case prompted YouTube to overhaul its system, requiring creators to self-label content as MFK or NMFK to comply with COPPA. Disney’s agreement goes further, mandating a comprehensive “audience designation program” to review every future YouTube video for child-directed appeal. This includes training for uploaders and integration of age-assurance technologies if YouTube implements them. The order, filed by the Department of Justice on behalf of the FTC, awaits final court approval.

FTC Chair Andrew Ferguson hailed the deal as a commitment to “ensuring that parents, not companies like Disney, make decisions about the collection and use of their children’s personal information online.” It’s a far cry from Disney’s 2011 settlement, where its Playdom subsidiary paid $3 million—the largest COPPA penalty at the time—for collecting data from kids on social games without consent. Critics, however, argue $10 million is a slap on the wrist for a company valued at over $170 billion, especially given the ad revenue generated from mislabeled content.

The Onslaught: Five Class Actions and Counting

The FTC’s announcement acted like a flare, igniting private litigation. By September 12, 2025—just 10 days later—at least five putative class-action lawsuits had been filed against Disney in federal districts including the Southern District of New York, Northern District of California, and Central District of Illinois. The complaints mirror the FTC’s allegations, claiming Disney’s practices constituted “unfair and deceptive acts” under COPPA and state privacy laws, leading to the unauthorized harvesting of children’s data for profit.

Key filings include:

• Doe v. Disney (S.D.N.Y., filed Sept. 5, 2025): A parent from New York alleges her 8-year-old viewed unlabeled Disney Junior clips, resulting in targeted ads for toys that exploited the child’s interests without consent. The suit seeks damages for emotional distress and invasion of privacy, estimating the class at “millions of U.S. children.”
• Smith v. The Walt Disney Company (N.D. Cal., filed Sept. 7, 2025): Filed by a California mother, this action accuses Disney of violating the California Consumer Privacy Act (CCPA) alongside COPPA, claiming the company profited from data sales to advertisers. It demands statutory damages up to $7,500 per violation.
• Three additional suits (various districts, Sept. 8-10, 2025): Similar parent-led complaints in Illinois, Florida, and Texas focus on specific channels like Pixar Cars (properly labeled) versus general Pixar (not), highlighting Disney’s inconsistent policies.

Plaintiffs argue that Disney’s failure to label videos deprived parents of control, exposing kids to “persistent tracking” via cookies and device IDs. Damages sought include compensatory awards, punitive measures, and injunctive relief to force better labeling practices. Legal experts predict more suits, as class certification could balloon the exposure—COPPA allows up to $43,280 in civil penalties per violation, though private actions cap at actual harm plus attorneys’ fees.

Disney has moved to dismiss some complaints, calling them “speculative” and preempted by the FTC settlement. But with discovery looming, the company faces a PR nightmare, especially as it promotes family-friendly brands like Mickey Mouse and Frozen.

The MDL Petition: Toward a Consolidated Showdown

Amid the flurry, a petition for multidistrict litigation (MDL) was filed on September 10, 2025, in the U.S. District Court for the Southern District of New York by attorneys from the plaintiffs’ steering committee. MDLs consolidate related cases for pretrial proceedings, streamlining discovery and rulings on common issues like class certification. If granted by the Judicial Panel on Multidistrict Litigation (JPML), this could centralize all Disney COPPA suits in Manhattan, where complex tech privacy cases often land.

The petition argues that the actions share “common factual and legal questions,” including Disney’s video designation failures and their role in data collection. Proponents cite efficiency: Separate litigations would duplicate efforts on YouTube’s algorithms and Disney’s internal policies. The JPML, which has greenlit over 1,800 MDLs since 1968, typically rules within months; a hearing is slated for November 2025.

This isn’t Disney’s first MDL rodeo. In 2023, it faced (and settled) an MDL over alleged price-fixing in theme park tickets. A COPPA MDL could draw parallels to the Epic Games Fortnite cases or TikTok’s ongoing privacy MDL, where settlements have topped $100 million. For Disney, consolidation means a unified defense but also amplified scrutiny—depositions from executives could reveal broader compliance lapses.

Broader Implications: A Chilling Effect on Kid Content?

Disney’s woes underscore COPPA’s evolution from a niche rule to a corporate minefield. Enforced since 2000, it has netted over $1 billion in penalties, targeting everyone from apps to streamers. The 2019 YouTube settlement alone reshaped online video, banning personalized ads on MFK content. Now, with AI-driven age verification on the horizon, the FTC is pushing for “future-proof” protections, as seen in Disney’s mandated review program.

For the industry, the fallout is seismic. Other giants like Warner Bros. Discovery and Paramount may audit their YouTube uploads, fearing copycat suits. Advocacy groups like the Center for Digital Democracy praise the actions but call for stricter rules, including a ban on all kid-targeted ads. Economically, mislabeling boosts revenue—NMFK videos fetch 20-30% higher ad rates—but at what cost? Disney’s stock dipped 1.2% post-settlement, wiping out $2 billion in market value.

Parents’ rights advocates see vindication: “This is about reclaiming control from corporations preying on our kids,” said one plaintiff attorney. Disney, meanwhile, vows to “remain a leader” in child safety, investing in compliance tools. But with litigation mounting, the Magic Kingdom’s digital realm feels anything but enchanted.

Key Timeline of Disney’s COPPA Saga

As the cases progress, Disney’s response will test its family-first image. Will it settle swiftly, like in past privacy dust-ups, or fight to the Supreme Court? One thing’s clear: In the battle for kids’ data, the house of Mouse is on defense.