Disney has agreed to pay $10 million and change how it labels children’s videos on YouTube to settle claims by the Federal Trade Commission (FTC) that the company violated federal children’s privacy laws.

The settlement resolves allegations that Disney subsidiaries Disney Worldwide Services Inc. and Disney Entertainment Operations LLC failed to properly flag some of their YouTube videos as “Made for Kids.” According to regulators, this mistake allowed Disney, through YouTube’s ad system, to collect personal data from children under 13 and serve them targeted ads in violation of the Children’s Online Privacy Protection Act (COPPA).

In a complaint filed in California federal court, the FTC and U.S. Department of Justice alleged that Disney improperly labeled certain child-focused videos as “Not Made for Kids,” even when they included content from franchises like Mickey Mouse, Frozen, Toy Story, Coco, and The Incredibles.

Because of that mislabeling, YouTube treated the videos as if they were aimed at a general audience, allowing Disney to collect personal data such as browsing history and serve targeted advertising, which is strictly prohibited by COPPA without verified parental consent.

The FTC pointed out that YouTube even warned Disney in 2020 that it had changed the designations on more than 300 Disney videos to “Made for Kids.” Still, Disney continued its practice of labeling content at the channel level instead of video-by-video, which the government says perpetuated the violations.

Under the proposed settlement, Disney will:

• Pay a $10 million civil penalty;
• Implement a new audience designation program so that its YouTube uploads are correctly labeled; and,
• Comply with COPPA, including restrictions on data collection and advertising for child-directed content.

The compliance requirement comes with flexibility: if YouTube later adopts stronger age assurance technology to automatically determine users’ ages, Disney would no longer need to maintain its own labeling system. The FTC said this provision reflects the growing role of technology in protecting kids online. Once approved, this settlement will serve as another warning to media and tech companies that when it comes to children’s data, regulators are watching closely, and even entertainment giants like Disney must “play by the rules.”