Disney will pay $10 million to settle FTC claim it used cartoons to collect YouTube data on kids

[Lauren Feiner]

Disney has agreed to pay $10 million to settle allegations from the Federal Trade Commission that it violated federal law by misleadingly labeling cartoons on YouTube so it could illegally collect children’s personal data.

The FTC alleges that Disney failed to label some videos of its popular kids cartoons it uploaded to YouTube as “Made for Kids” — a designation that makes such videos ineligible for certain features, like the collection of personal information. It’s a way YouTube makes it harder to target kids with personalized ads. But rather than mark individual videos as either “Made for Kids” or “Not Made for Kids,” the FTC alleges, Disney left the default designation at the channel level, so any video uploaded to a “Not Made for Kids” channel would bear that “Not Made for Kids” label instead.

The result was that videos with content from kid-friendly movies like “The Incredibles,” “Toy Story,” and “Frozen” would be marked as “Not Made for Kids,” according to the government, circumventing YouTube’s heightened restrictions, including allowing YouTube to autoplay other “Not Made for Kids” videos after the Disney ones finished. That resulted in Disney collecting information on kids and serving them targeted ads on videos that were technically designed at not for kids, the FTC alleges, in violation of the Children’s Online Privacy Protection (COPPA) Rule, which requires parental consent to collect information on kids under 13.

YouTube implemented the labeling system after its own 2019 settlement with the FTC over alleged violation of the COPPA Rule.

Disney should have known that some of its videos were marked incorrectly, the government alleges, since YouTube already told Disney in 2020 that it was labeling its videos incorrectly, changing the labels on over 300 of its videos from “Not Made for Kids” to “Made for Kids” at that time, according to the complaint. But Disney continued to upload videos with only the default designation at the channel level, the FTC says.

Under the proposed settlement, Disney will pay a $10 million civil settlement, obtain parents’ consent for collecting data from kids under 13 as required by law, and create a new program to review whether videos uploaded to YouTube should be marked as made for kids or not which it must maintain for the next ten years — unless YouTube comes up with its own system “to determine the age, age range, or age category of all YouTube users.” If so, Disney will no longer need its own system to figure out how videos should be labeled.

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