Disney to Pay $10 Million to Settle FTC Allegations of Unlawful Children’s Data Collection on YouTube
In a significant enforcement action under the Children’s Online Privacy Protection Act (COPPA), The Walt Disney Company has agreed to pay a $10 million civil penalty to resolve Federal Trade Commission (FTC) allegations that it enabled the unlawful collection of personal data from children under 13. The settlement, announced on September 2, 2025, stems from Disney’s failure to properly label certain kid-directed videos uploaded to YouTube as “Made for Kids” (MFK), allowing YouTube to collect and use children’s data for targeted advertising without parental notification or consent. This marks the first privacy enforcement case under the leadership of Trump-appointed FTC Chairman Andrew N. Ferguson and highlights ongoing scrutiny of how entertainment giants handle children’s online privacy.
Background on the Allegations
The FTC’s complaint, filed by the Department of Justice (DOJ) in the U.S. District Court for the Central District of California, accuses Disney Worldwide Services, Inc., and Disney Entertainment Operations LLC of violating the COPPA Rule between 2020 and 2022. COPPA, enacted in 1998, requires online services directed at children under 13 to notify parents about data collection practices and obtain verifiable parental consent before gathering personal information from minors. This includes identifiers like IP addresses, device IDs, and viewing habits that can be used for behavioral advertising.
Following a 2019 FTC settlement with YouTube (then owned by Google), the platform implemented a system requiring content creators to designate videos as MFK or “Not Made for Kids” (NMFK) to comply with COPPA. MFK videos disable personalized ads and data collection from child viewers. The FTC alleged that Disney mislabeled over 300 videos featuring characters like Mickey Mouse, Elsa from Frozen, and Spider-Man, despite their clear appeal to young audiences. YouTube even re-designated some of these videos as MFK in mid-2020, but Disney persisted with a blanket channel-level labeling policy that treated much of its content as NMFK, enabling data collection for advertising purposes.
“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,” said FTC Chairman Andrew N. Ferguson. The violations did not occur on Disney-owned platforms like Disney+, but specifically involved content distributed on YouTube, a third-party site.
Terms of the Settlement
The proposed stipulated order, approved by a unanimous 3-0 FTC vote and filed with the DOJ, imposes several requirements on Disney beyond the $10 million penalty:
- Full COPPA Compliance: Disney must notify parents before collecting data from children under 13 and obtain verifiable parental consent for any collection or use of such data.
- Video Review Program: The company is mandated to establish and implement a comprehensive program to evaluate whether its YouTube videos should be designated as MFK. This includes internal audits and criteria to identify child-directed content accurately. The requirement is forward-looking and anticipates advancements in age assurance technologies; it would be waived if YouTube adopts system-wide age verification for all users or eliminates creator labeling options.
- No Admission of Liability: While Disney does not admit wrongdoing, the settlement prohibits future COPPA violations and misrepresentation of its children’s privacy practices.
The FTC emphasized that this provision promotes the adoption of age assurance tools, reflecting evolving technologies to protect kids online. The settlement is pending court approval but is expected to be finalized soon.
Disney’s Response and Historical Context
A Disney spokesperson stated, “Supporting the well-being and safety of kids and families is at the heart of what we do. 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. 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.”
This is not Disney’s first brush with COPPA enforcement. In 2011, the company paid $3 million to settle FTC charges related to its Playdom subsidiary’s virtual worlds, which collected data from children without parental consent. More recently, in 2020-2021, Disney was part of class-action settlements with Viacom and ad-tech firms over data tracking in children’s gaming apps like “Where’s My Water?” and “Disney Princess Palace Pets,” agreeing to limit data collection and remove tracking software. A 2017 class-action lawsuit accused Disney apps of spying on kids via third-party trackers, leading to further injunctive relief.
These cases illustrate a pattern of challenges in the children’s digital space, where popular content inadvertently or systematically exposes young users to data risks.
Broader Implications for Tech and Entertainment Industries
The settlement reinforces the FTC’s aggressive stance on COPPA amid rising concerns over children’s online safety. With millions of children viewing Disney content on YouTube daily, the mislabeling could have affected vast numbers of minors, enabling behavioral profiling for ads. Chairman Ferguson highlighted the penalty as a deterrent against “abuse of parents’ trust,” signaling potential for more actions against platforms and creators.
For YouTube and content giants, the order’s emphasis on age assurance technologies could accelerate industry-wide changes. Google has been piloting age verification tools, but widespread implementation remains elusive due to privacy and usability concerns. Advocacy groups like Common Sense Media praised the outcome but called for stronger legislation, such as the proposed Do Not Track Kids Act, to ban targeted ads to children outright.
Economically, the $10 million fine is modest for Disney, which reported $23.1 billion in revenue for its fiscal Q3 2025. However, it adds to regulatory pressures on Big Tech, following recent FTC suits against TikTok and Meta over child safety. As streaming and short-form video proliferate, companies must refine labeling and compliance to avoid escalating penalties—previous YouTube fines reached $170 million in 2019.
This case serves as a reminder that even beloved brands like Disney are not immune to privacy scrutiny, underscoring the need for robust safeguards in kid-focused digital content.
Sources: Reuters, Federal Trade Commission, Los Angeles Times, Bloomberg Law, Deadline