The FTC hosts an event on digital marketing and the impact of blurry advertising on children
On October 19, 2022, the Federal Trade Commission (FTC) hosted a virtual event to explore the concept of “fuzzy” advertising in digital media and its impact on children. As the FTC plans to update rules relating to both the Children’s Online Privacy Protection Act (COPPA) and advertising, Chairwoman Lina Khan has suggested that children are likely to be more susceptible to deceptive or harmful practices caused by inaccurate advertising because they may provide their personal information or engage in business transactions without knowing it. This event covered a variety of topics, but focused on three main areas: children’s cognitive abilities when processing advertising content, quantifying harms in today’s legal and regulatory landscape, and possible solutions for determining how children can interact more intelligently with blurry advertising content.
President Khan opened the event by highlighting how advertising aimed at children has evolved over the past decades. In particular, as children have developed a natural interest and skill in digital technologies, advertising in digital spaces has evolved to mix organic content with advertising content, exposing children to up to a thousand advertisements per day. She explained that the FTC is particularly concerned about this exposure because children may be vulnerable to advertising designed to commercially exploit them because their brains are still developing.
Chair Khan concluded her remarks by mentioning that the FTC is exploring several options to address the advertising issues, including updating the commission’s rule implementing COPPA, engaging in a regulatory proposal related to commercial surveillance and the aggressive pursuit of law enforcement action using existing legal authorities. .
Presentation: Show and Tell of Children’s Advertising
Mamie Kresses, vice president of BBB’s National Programs Children’s Advertising Review Unit (CARU), analyzed the FTC’s current authority to crack down on children’s advertising. When the FTC attempted to impose restrictions on all advertising directed at children in the 1970s with its KidVid regulations, the US Congress revoked the Commission’s authority to pass a rule on children’s advertising based on a theory of “unfairness”. This restriction is still in place today. Kresses also mentioned that while COPPA doesn’t focus on advertising, it’s relevant in helping to determine what content is intended for children, as it’s the only federal law that defines what “directed by children” means.
Kresses then provided sample screenshots and videos of content kids and teens are likely to see that may contain blurry ads. The first set of examples focused on game websites designed for children with attractive colors and cartoon-like graphics, but required children to click on branded content or potentially make a purchase before they could keep playing the game. She mentioned that young children can be especially susceptible to financial and emotional manipulation for this type of digital media. The second set of examples consisted of videos of children or teenagers using certain products. Kresses said it’s unclear whether the kids or teens in these videos are being paid or not, demonstrating the importance of disclosing relationships between influencers and brands in a way kids can understand.
First panel: the cognitive abilities of children—What do they know and when?
The first panel explored how the cognitive abilities of children at different ages and developmental stages affect how they understand advertising content. Panelists were asked to discuss the factors that influence a child’s ability to process both advertising messages and the persuasive intent of an advertisement.
Panelists highlighted the importance of children being able to recognize advertising as advertising so they can make informed decisions about the content they consume in digital spaces. All panelists agreed and noted that children’s ability to recognize an advertisement involves different processing skills than their ability to understand the persuasive intent behind an advertisement.
Second panel: The current advertising landscape and its impact on children
The second panel focused on strategies for assessing and addressing the harms presented by fuzzy advertising through legal, regulatory and self-regulatory mechanisms.
Panelists debated whether the FTC has the authority to issue rules for advertising to children. One panelist noted that Congress specifically limited the FTC’s regulatory power over children’s advertising through the FTC Improvements Act of 1980,1 and said this ban would extend to digital advertising. Other panelists disagreed, arguing that advertising today is not “substantially similar” to the advertising the FTC tried to regulate under KidVid. A panelist also suggested that the FTC would have the power to regulate blurry advertising under its power of deception.
Panelists were asked to discuss how they would quantify the financial, psychological, physical and privacy damage caused by blurry advertising. Notably, one panelist expressed skepticism about the extent of the financial harm caused by blurry advertising in a post-AMG world.2 Instead of the FTC being able to look at a company’s revenue generated by fuzzy advertising, it should look at whether the existence of fuzzy advertising had a material impact on a child’s decision to make a purchase. The problem with this approach is that if a child cannot identify the presence of an advertisement, there may be no material difference when the child decides to make a purchase based on a fuzzy advertisement. Another panelist said financial harm should be looked at more broadly, as unintended purchases are likely to affect a child’s parents as well.
Third panel: looking to the future and considering solutions
The third and final panel looked at different methods and challenges in developing solutions to protect children from blurry advertising. Discussion topics included the benefits and challenges of designing iconography that can help alert children to the existence of paid advertising, the need for media literacy campaigns, and the benefits and limitations of advertising. self-regulation versus FTC enforcement.
The moderator posed several questions, including whether the FTC should take the lead in addressing harms caused by blurry advertising, encouraging ad blocking, or providing guidance on the design of disclosures. Panelists mostly agreed that ad blocking isn’t the ultimate solution as it prevents families from engaging with free ad-supported content, but there should be a balance between ad-led solutions. industry and regulatory guidelines. Several panelists also said that self-regulation is helpful as technology is constantly changing, but one cautioned that it cannot be the main solution as the advertising industry is still operating within outdated legal frameworks. .
The FTC is seeking additional public comment on how children are affected by digital advertising and marketing messages that may blur the line between advertising and entertainment. Comments must be submitted by November 18, 2022.
Wilson Sonsini Goodrich & Rosati regularly helps companies solve complex privacy and data security issues. For more information or advice regarding cybersecurity compliance or investigations, please contact Libby Weingarten, Lydia Parnesor any member of the firm privacy and cybersecurity practice.
FTC Improvements Act of 1980, Pub. L. No. 96-252, 94 Stat. 374 (1980). Section 18(h) of the FTC Act prohibits the Commission from enacting “any rule in the children’s advertising proceeding pending May 28, 1980, or any substantially similar proceeding on the basis of a decision of the Commission that such advertising constitutes an act or practice in or affecting trade.
AMG Capital Management, LLC v FTC, no. 19-508, sheet op. (April 22, 2021), https://www.supremecourt.gov/opinions/20pdf/19-508_l6gn.pdf (stating that Section 13(b) does not give the FTC authority to seek restitution or disgorgement of consumer monetary relief under the FTC Act).