By Bill Pan

Disney will pay $10 million to settle allegations that it violated a federal children’s privacy law through its popular YouTube channels, the U.S. Justice Department (DOJ) said.

Under a stipulated order entered on Dec. 30 by a federal court in California, Disney Worldwide Services Inc. and Disney Entertainment Operations LLC agreed to the civil penalty to resolve claims that they violated the Children’s Online Privacy Protection Act (COPPA). The law prohibits the collection and use of personal information from children under the age of 13 without notifying their parents and obtaining their consent.

The dispute stems from YouTube’s 2019 requirement that content creators, including Disney, identify whether their videos are “Made for Kids” to help the platform comply with COPPA. YouTube relies on these designations to determine which features and advertising formats may be enabled on a video.

When a video is marked as “Made for Kids,” YouTube automatically disables several features, including comments, targeted advertising, autoplay on the Home page, Miniplayer viewing, and the ability to save videos to playlists or “watch later.” These restrictions are designed to prevent the collection of personal data from children that would otherwise require parental consent under COPPA.

“Made for Kids” videos also autoplay only to other videos in that category, and not to content marked for general audiences.

According to a federal complaint, YouTube told Disney and other creators that they could set their audience designation at either the channel level or the video level, depending on how much of their content was intended for children.

Despite YouTube’s instruction, prosecutors alleged, Disney failed to properly label its children-oriented content as “Made for Kids.” As a result, Disney allegedly collected data on people under the age of 13 and used that information for targeted advertising through its YouTube channels in violation of COPPA.

Disney’s YouTube channel attracts “billions of views in the United States alone,” according to the DOJ.

“The Justice Department is firmly devoted to ensuring parents have a say in how their children’s information is collected and used,” Assistant Attorney General Brett Shumate of the DOJ’s Civil Division said in a statement. “The Department will take swift action to root out any unlawful infringement on parents’ rights to protect their children’s privacy.”

In addition to the $10 million civil penalty, the stipulated order bars Disney from operating its YouTube content in ways that violate COPPA and requires the company to establish a compliance program to ensure future compliance with the law.

Disney did not immediately respond to a request for comment. When the settlement was first proposed in September, a spokesperson for the entertainment giant stressed that the case was “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,” the spokesperson said at the time.