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disney will pay 10 million to settle — Disney has agreed to pay $10 million to settle allegations from the Federal Trade Commission that it violated federal law by misleadingly labeling cartoons on YouTube so it could illegally collect children’s personal data..

Disney has agreed to pay $10 million to settle allegations from the Federal Trade Commission that it violated federal law by misleadingly labeling cartoons on YouTube so it could illegally collect children’s personal data.

disney will pay 10 million to settle

Background of the Allegations

disney will pay 10 million to settle: key context and updates inside.

The Federal Trade Commission (FTC) has taken a firm stance against companies that fail to comply with the Children’s Online Privacy Protection Act (COPPA). This law is designed to protect the privacy of children under the age of 13 by requiring parental consent before collecting personal information from minors. The FTC’s allegations against Disney center around the company’s failure to properly label certain videos on YouTube, which allowed them to collect data from children without obtaining the necessary consent.

Disney, a major player in the entertainment industry, has a long history of producing content aimed at children. With popular franchises such as “Toy Story,” “Frozen,” and “The Incredibles,” the company has a significant presence on platforms like YouTube, where it shares content with millions of young viewers. However, the FTC claims that Disney misused this platform to circumvent the protections put in place by COPPA.

The Nature of the Violations

According to the FTC, Disney did not label certain videos of its popular children’s cartoons as “Made for Kids.” This designation is crucial because it restricts the collection of personal information from viewers under the age of 13. By failing to mark these videos appropriately, Disney allegedly allowed YouTube to classify them as “Not Made for Kids.” This mislabeling had significant implications, as it enabled Disney to collect data on young viewers and serve them targeted advertisements, which is a direct violation of COPPA.

How the Labeling System Works

YouTube implemented a labeling system following its own settlement with the FTC in 2019 over similar COPPA violations. Under this system, videos labeled as “Made for Kids” are subject to stricter regulations, including limitations on personalized ads and the collection of user data. The FTC alleges that Disney took advantage of a loophole by leaving the default designation at the channel level, rather than labeling individual videos. As a result, videos uploaded to a “Not Made for Kids” channel would automatically receive that designation, even if the content was clearly aimed at children.

This mislabeling allowed Disney to circumvent YouTube’s heightened restrictions, which include preventing the autoplay of other “Not Made for Kids” videos after a Disney cartoon finished playing. Consequently, Disney was able to collect information on children and serve them targeted ads on videos that were technically labeled as not intended for kids.

Previous Warnings from YouTube

The FTC’s complaint also highlights that Disney should have been aware of the mislabeling issue. In 2020, YouTube informed Disney that it was incorrectly labeling its videos, changing the labels on over 300 of Disney’s videos from “Not Made for Kids” to “Made for Kids.” Despite this warning, the FTC alleges that Disney continued to upload videos with only the default designation at the channel level, thereby ignoring the necessary compliance measures.

The Settlement Agreement

Under the terms of the proposed settlement, Disney will pay a civil penalty of $10 million. This amount reflects the seriousness of the allegations and serves as a deterrent to other companies that may consider similar practices. In addition to the financial penalty, Disney is required to obtain parental consent for collecting data from children under 13, as mandated by COPPA.

Furthermore, Disney must establish a new program to review whether videos uploaded to YouTube should be marked as “Made for Kids” or “Not Made for Kids.” This program must be maintained for the next ten years unless YouTube develops its own system to determine the age, age range, or age category of all users. If such a system is implemented, Disney will no longer need to maintain its own labeling program.

Implications of the Settlement

The settlement carries significant implications for Disney and the broader entertainment industry. By agreeing to this settlement, Disney acknowledges the importance of adhering to COPPA regulations and the need to protect children’s online privacy. The $10 million penalty serves as a reminder that companies must take compliance seriously, especially when dealing with content aimed at younger audiences.

Moreover, this case highlights the ongoing scrutiny that digital platforms and content creators face regarding their practices in collecting user data. As technology continues to evolve, regulatory bodies like the FTC are increasingly vigilant in ensuring that companies comply with laws designed to protect vulnerable populations, particularly children.

Stakeholder Reactions

The settlement has elicited a range of reactions from stakeholders, including parents, child advocacy groups, and industry experts. Many parents have expressed relief that regulatory bodies are taking action to protect their children’s privacy online. The FTC’s decision to hold Disney accountable reinforces the notion that companies must prioritize the safety and privacy of young users.

Child advocacy groups have also welcomed the settlement, viewing it as a step in the right direction toward greater accountability in the digital landscape. These organizations have long campaigned for stricter regulations on how companies collect and use data from children, and the Disney case serves as a precedent for future enforcement actions.

Industry experts have noted that the settlement could have a ripple effect across the entertainment sector. Companies may be more inclined to review their own practices and ensure compliance with COPPA to avoid similar legal challenges. This increased vigilance could lead to a more responsible approach to content creation and data collection in the industry.

Future Considerations

As digital platforms continue to evolve, the landscape of online content for children will likely undergo significant changes. Companies like Disney will need to adapt to new regulations and consumer expectations regarding data privacy. The implementation of robust labeling systems and parental consent mechanisms will become increasingly important as the industry navigates the complexities of online child safety.

Moreover, the Disney case serves as a reminder that compliance is not a one-time effort but an ongoing commitment. Companies must continuously assess their practices and ensure that they align with legal requirements and ethical standards. This will require investment in training, technology, and processes to safeguard children’s privacy effectively.

Conclusion

The $10 million settlement between Disney and the FTC underscores the critical importance of protecting children’s online privacy. As the digital landscape continues to evolve, companies must prioritize compliance with regulations like COPPA to ensure the safety of young users. The implications of this case extend beyond Disney, serving as a cautionary tale for the entire entertainment industry. Stakeholders, including parents and advocacy groups, will be watching closely to see how Disney and other companies adapt to the changing regulatory environment and prioritize the privacy of their young audiences.

Source: Original report

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