Explained: Why Disney is paying $10 million to settle a US lawsuit

A complaint was filed against Disney Worldwide Services and Disney Entertainment Operations in a federal court in California over alleged violations of US children's privacy rules

Disney has agreed to pay $10 million to settle a US government lawsuit over how it handled children’s data online, the US Department of Justice announced on Tuesday (local time). The case focused on Disney’s activities on YouTube and whether the company properly followed US laws meant to protect children’s privacy.

What is the case about?

A complaint was filed against Disney Worldwide Services and Disney Entertainment Operations in a federal court in California. The government accused Disney of breaking rules under the Children’s Online Privacy Protection Act (COPPA).

 

COPPA protects children under the age of 13. It does not allow companies to collect personal data from children unless parents are informed and give permission.

 

What did Disney do wrong?

Disney failed to clearly label some of its YouTube videos as content meant for children. As a result, Disney was able to collect data from children and show them targeted advertisements without telling parents or getting their consent.

 

The US Department of Justice said this went against COPPA rules, which are meant to stop companies from tracking or advertising to young children without parental approval.

 

“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 of the Justice Department’s Civil Division. “The Department will take swift action to root out any unlawful infringement on parents’ rights to protect their children’s privacy.”

How did Disney settle the case?

Disney agreed to settle the case without going to a full trial. A federal court approved a deal that requires the company to pay $10 million as a penalty.

 

Under the settlement, Disney is also barred from operating on YouTube in ways that violate COPPA in the future. This means Disney must follow stricter rules when dealing with content that is meant for children.

 

The case comes at a time when US lawmakers are trying to strengthen protections for children online. In 2024, the Senate passed an updated version of COPPA that would give children under 17 stronger safety protections on digital platforms.

Have other companies faced similar action?

Several major companies have paid large penalties in recent years for violating children’s privacy laws. In 2023, Microsoft agreed to pay $20 million to settle claims related to collecting data from children using its Xbox system, The Wall Street Journal reported. In 2024, the Federal Trade Commission recommended a civil lawsuit against TikTok over alleged COPPA violations.