Disney Settlement Results in $10M Payout Over Child Data Collection Practices

Federal regulators accused the company of unlawfully collecting children’s data through YouTube without requiring parental consent.

Disney has agreed to pay a $10 million fine and revise its data collection practices, following allegations that it improperly gathered information from children, and failed to adequately label content on YouTube.

On September 2, the U.S. Federal Trade Commission (FTC) announced a settlement with Disney, stating in a press release that the company failed to properly label some of its YouTube videos as “made for kids.” Disney has agreed to comply with the terms of the settlement.

The Children’s Online Privacy Protection Act (COPPA), passed in 1998, requires companies to notify users and obtain parental consent when collecting data from children’s content. However, as online platforms have become more deeply embedded in daily life, many companies have faced accusations of violating this rule.

In September 2024, the FTC issued a report stating that data privacy at Facebook, Amazon and other major social media platforms was “woefully inadequate,” indicating that many children’s and teens’ online habits are often tracked and monetized without proper parental consent.

This information is particularly concerning in light of ongoing social media addiction lawsuits, claiming that many of these platforms, including Facebook, Instagram, TikTok and Snapchat, use algorithms intended to maximize user engagement, which has led to compulsive use, eating disorders, depression, anxiety, suicide and sexual abuse among a generation of children and teens.

According to a complaint (PDF) filed by The U.S. Department of Justice (DOJ) at the FTC’s request, Disney failed to label roughly 300 YouTube videos from franchises like Frozen, Toy Story, Incredibles, Coco and Mickey Mouse as “Made for Kids.” Many of the mislabeled uploads included “storytime” videos released early in the COVID-19 pandemic, often featuring celebrities reading to children.

Regulators say Disney placed these videos on channels incorrectly marked as “not made for kids,” allowing the company to bypass YouTube safeguards adopted in 2019. YouTube itself flagged the problem in mid-2020 and reclassified the content. However, Disney continued using channel-level settings that let the violations persist even after being put on notice.

“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. Our order penalizes Disney’s abuse of parents’ trust, and, through a mandated video-review program, makes room for the future of protecting kids online—age assurance technology.”

— Andrew N. Ferguson, FTC Chairman

Under the proposed settlement order (PDF), Disney will pay $10 million, notify parents before collecting children’s data, and create an “Audience Designation” program to ensure kids’ videos are properly labeled before being uploaded. The company must also maintain the program and related compliance records for 10 years, unless YouTube implements its own age-assurance system.

Social Media Addiction Lawsuits

Alongside the FTC’s recent actions against Disney, more than 1,800 social media addiction lawsuits have been consolidated in a multidistrict litigation (MDL) before U.S. District Judge Yvonne Gonzalez Rogers in the Northern District of California, accusing major social media platforms of intentionally using algorithms and design features that foster compulsive use among children, placing profits and engagement ahead of user safety.

In June, Judge Rogers selected 11 student cases to serve as early “bellwether” trials, which will test how juries react to evidence and testimony expected to be central to the broader litigation. Those lawsuits are now undergoing additional discovery, with the first trial anticipated in late 2026.

While the bellwether outcomes will not directly decide the remaining claims, they are expected to influence settlement talks by signaling how juries may view the allegations and evidence presented across the MDL.

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