The Walt Disney Company has agreed to pay $10 million to resolve allegations that it violated U.S. children’s privacy laws by failing to properly label some of its YouTube videos as content made for children, the U.S. Department of Justice confirmed on Tuesday.

According to federal authorities, Disney’s alleged misclassification allowed targeted advertising to be served on videos directed at children and enabled the collection of personal data without parental notice or consent, in breach of the Children’s Online Privacy Protection Act (COPPA).

The settlement follows an investigation by the Federal Trade Commission (FTC) and applies to Disney Worldwide Services Inc. and Disney Entertainment Operations LLC. As part of the agreement, Disney will also implement a comprehensive compliance program to ensure adherence to U.S. children’s data protection laws.

“The Justice Department is firmly devoted to ensuring parents have a say in how their children’s information is collected and used,” said Brett Shumate, Assistant Attorney General for the Civil Division, in a statement announcing the federal court order.

A Disney spokesperson confirmed that the company has accepted the terms of the settlement, which were initially disclosed in September. Disney emphasized that the agreement is limited to the distribution of certain content on YouTube and does not involve its own digital platforms or services.

Under COPPA, companies and content creators producing material for children under the age of 13 must notify parents and obtain verifiable consent before collecting personal information. The law also prohibits targeted advertising on child-directed content.

Regulators alleged that Disney failed to properly identify numerous videos—many uploaded during the Covid-19 pandemic—as children’s content. Since 2020, Disney has uploaded videos to more than 1,250 YouTube channels through multiple subsidiaries, according to the Justice Department’s complaint filed in California. Many of these videos attracted massive audiences, with viewership surging during pandemic lockdowns.

The complaint further states that Disney was aware of labeling failures as early as June 2020, when YouTube allegedly informed the company that it had reclassified more than 300 videos, including content related to Toy Story, Frozen and The Incredibles.

Government lawyers argued that Disney’s alleged misclassification “resulted in YouTube collecting personal information and placing targeted advertisements on child-directed videos on Disney’s behalf,” in violation of federal law.