Disney has agreed to pay a $10 million civil penalty to settle claims that it violated the Children’s Online Privacy Protection Act by mislabeling videos and allowing data collection for targeted advertising.

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

According to a complaint filed by the U.S. Justice Department, following a referral from the Federal Trade Commission (FTC), Disney allegedly failed to tag kid-directed videos on YouTube as “Made for Kids” (MFK), a label that instructs YouTube to block personal data collection and stop displaying personalized ads on correctly designated content to protect children’s privacy.

Content creators have been required to mark uploaded videos and YouTube channels as MFK since 2019, when Google and YouTube paid $170 million to settle claims that they violated the Children’s Online Privacy Protection (COPPA) Rule, which requires online services, websites, and apps to obtain parental consent before collecting personal information from children under 13.

The Justice Department added that Disney also failed to correctly designate children-focused content, even after YouTube alerted the entertainment giant that it switched labels in 2020 for over 300 Disney videos from NMFK to MFK.

“The complaint says the mislabeling allowed Disney, through YouTube, to collect personal data from children under 13 viewing child-directed videos and use that data for targeted advertising to children,” the FTC said in September when it announced a proposed order imposing the $10 million civil penalty.

“Disney receives a portion of the revenues that YouTube generates from advertising placed with Disney videos and revenues from advertising that Disney sells directly.”

In addition to this civil penalty, the settlement will require Disney to alert parents before collecting kids’ personal information and ensure that videos posted to YouTube are correctly designated as “Made for Kids” to prevent unlawful data collection and targeted advertising on its YouTube videos for children.

In September 2024, the FTC also exposed video streaming and social media companies earning billions annually by monetizing data collected through widespread surveillance of children and teens.