Blurred Lines: Overview of the FTC Workshop “Protecting Children from Stealth Advertising in Digital Media” | Kelley Drye & Warren LLP

As we recently blogged here, the FTC’s review of the COPPA rule has been pending for more than three years, prompting a group of senators in early October to ask the agency to “Please put update the COPPA rule now”. The FTC has yet to respond to this request (at least not publicly) or take official action to resume its review of COPPA. However, the agency is focusing on children’s privacy and safety in other ways, including hosting a virtual event on October 19 on “Protecting Children from Stealth Advertising in Digital Media.”

The FTC’s one-day event examined how “blurry” advertising with other online content (“stealth advertising”) affects children. Among other things, the event addressed concerns that some advertising in the digital space – such as the use of social media influencers, product placement in the metaverse, or “advergames” – may be misleading. or unfair because children do not know that the content is an advertisement and/or cannot recognize the impact of advertising.

The event focused on: (1) the ability of children at different ages to recognize advertising content and distinguish it from other content; (2) harm resulting from children’s inability to recognize the advertisement; (3) what measures can be taken to protect children from unclear advertising content; and (4) the need for and effectiveness of disclosures as a solution for children of different ages, including the format, timing, placement, wording, and frequency of disclosures. The FTC has also invited public comment on these topics (until November 18).

The event delved into these questions, with the help of a range of legal, policy, behavioral and communications experts. (See here for the agenda and list of panelists.) The discussion was interesting and substantial, and built on actions already taken in Europe and California to develop age-appropriate codes governing content intended for children. However, the event left open the question of whether and how the FTC intends to address the issues discussed. Will he proceed via advice or rules? If it’s regulation, does it plan to use COPPA, the pending Mag-Moss regulation on “commercial oversight” or some other regulatory vehicle?

All of these options present challenges: COPPA gives parents the tools to control the content their children see, but generally does not regulate the content itself. Mag-Moss is a long process, which the FTC has made particularly complex with its sprawling ANPR. Finally, any regulations restricting advertising to children could come up against Mag-Moss’ specific provision (discussed here) limiting the FTC’s regulatory authority in this area. (On the other hand, protecting children’s privacy and safety tends to be a bipartisan issue, which will help the agency address these issues.)

Here are more details about what happened at the workshop:

First, opening remarks from FTC Chairwoman Lina Khan

In her opening remarks, President Khan set the stage by describing how much advertising has changed over the past few decades. In the past, every child saw the same advertisement, but now the digital space allows companies to treat every child as a unique audience. Additionally, ads now blur commercial and organic content, and kids can’t tell the difference. Chairman Khan said the FTC is considering whether to update its COPPA rule, while seeking comment on commercial oversight more broadly, including stealth advertising to children.

Next, CARU Vice President Mamie Kresses presented a “Children’s Advertising Show and Tell”

Kresses (who co-directed the COPPA program when she was at the FTC) explained that CARU (BBB’s National Programs Children’s Advertising Review Unit) has focused more on ad oversight. aimed at children in the digital space, because that’s where the majority of ads are now. Advertisers should ensure that when engaging in blurring they do not mislead children about the nature of commercial content. Advertisers should also avoid manipulation, meaning preventing children from knowing when they are shopping or relying too much on their emotions.

Above all, Kresses said, the digital space has changed with the creation of computer-generated imagery influencers. Advertisers should make it clear to children that a gaming avatar, for example, is part of a paid relationship. In general, advertisers should clearly indicate whether something is an advertisement, even in these new creative spaces.

Panel 1: Children’s cognitive abilities – what do they know and when?

During this discussion, panelists highlighted why protecting children in the digital space is so important. Children lack the skills to understand the persuasive effects of advertising and also tend to believe that companies have their best interests in mind. When entertainment and commercial content is blurry (for example, when a virtual reality character gives something to a child in the metaverse, or an influencer promotes a product), the child cannot say they are advertisements and assume that the content is entirely good or true. In these spaces, children develop parasocial relationships and emotional attachments with content creators and influencers, which affects their ability to evaluate ads and cues. As one panelist stated, children’s naivety shouldn’t be a tool for advertisers.

Second panel: The current advertising landscape and its impact on children

This panel primarily discussed whether stealth advertising is an unfair practice under the FTC law. Citing the elements of unfairness, some believed the harm outweighed the benefits, while others believed the research was not strong enough to prove the harm and any harm was outweighed by the value of the information conveyed. by advertisements.

According to some panelists, a blurry ad can distract a child from the persuasive intent of an ad, causing them to rely more on emotion and less on rationality. Additionally, they said, research suggests that certain methods of unfocused advertising, such as the use of influencers, can be toxic to children, increasing eating disorders and worsening the current mental health crisis. , especially when advertising is targeted and prolonged. Other panelists argued that just because an ad works doesn’t mean it’s harmful or misleading. They also said that non-misleading advertisements are protected by the First Amendment.

Panel 3: Looking Ahead and Considering Solutions

The final panel discussed potential solutions to the stealth advertising challenge, including disclosures, parental controls, educational programs or even a ban on blurry advertising aimed at children. As these panelists acknowledged, the solutions all come with limitations: (1) children cannot always read or understand the disclosures; (2) parents do not have the time or resources to monitor every piece of content their child consumes; (3) there is a lack of resources for educational programs; and (4) a ban could face First Amendment issues.

Closing Remarks by FTC Associate Director Serena Viswanathan

In conclusion, Viswanathan said the FTC hopes to provide guidance and recommendations on how to comply with applicable laws and avoid problems associated with stealth advertising to children. She said the FTC is following these issues with interest, eager to consider public comment, and continues to engage with stakeholders.

* * *

That’s our quick summary for now. Stay tuned as we continue to follow this topic and learn what next steps the FTC may be planning in this area.

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