If it feels like it has been ages since you heard about one of the Federal Trade Commission (FTC or Commission) public meetings, well, that’s kind of true. There was a meeting back in July that discussed military consumer protection efforts, but that’s been it. The latest meeting marked the return to some issues that are of significant concern to advertisers.
You may recall that back in October 2022, the FTC hosted a workshop titled “Protecting Kids from Stealth Advertising.” We wrote about it here, but the gist of the event was about whether and how the little ones understand the difference between content and advertising when it comes to digital marketing. FTC Chair Lina Khan rang some loud alarm bells at the event, noting:
What particularly concerns the FTC is the fact that kids often can’t tell the difference between ads and organic content. Some forms of advertising are intentionally designed to exploit kids’ insecurities for commercial gain. Children and teens can end up engaging in commercial transactions without realizing it. They may provide personal information without understanding the privacy risks. When stealth advertising is combined with concerning content like gambling or e-cigarettes, the risks can be even greater.
Since then, not much about the event. The recent revised endorsement guides, however, did include a new provision that noted without much detail that “Endorsements in advertisements addressed to children may be of special concern because of the character of the audience. Practices that would not ordinarily be questioned in advertisements addressed to adults might be questioned in such cases.” So we were wondering when we would hear more about the kids.
But at the latest meeting, we finally got the official readout from the event – a report on the workshop – with recommendations. Well, technically, they are releasing what is called a Staff Perspective – which is something a bit less formal and less vetted than a Commission Report. Those distinctions are somehow important within the agency and can bear on the level of review given to the document, but for the rest of us, those differences aren’t particularly important. It’s important to review, consider and evaluate – and it sets forth some expectations from the agency about the issues discussed.
With that, we turn to the meeting. This topic kicked off with a presentation from an FTC staffer about the workshop and the report. She provided an overview of the agency’s focus and the concerns that have been raised about the blurring of advertising and content when it comes to kids. She described the workshop and discussed different age ranges and the general understanding of how kids at different ages are able to – or not able to – distinguish between content and advertising. She often emphasized the importance of visual and audio cues for kids of all ages and the fact that one can’t generalize about kids at certain ages. In each group there are kids who just don’t understand the concept of bias and the nature of advertising.
The staffer also discussed the various harms that may be caused by the blurring of advertising and content, ranging from accidental purchases to privacy harms caused by children sharing too much information. So what are the recommendations in this Staff Perspective? She described five recommendations and emphasized that the solution cannot be to put the onus on parents to gatekeep:
- Adverting to kids shouldn’t be blurred; there should be clear separation of advertising and content through the use of formatting and through visual and verbal cues.
- Prominent just-in-time disclosures (verbal and written) should emphasize the commercial nature and intent.
- Platforms, content creators and marketers should develop and use a consistent and easy-to-understand icon to signal that money has changed hands.
- Education should be provided for parents, children and teachers about how digital advertising works.
- Platforms should require clear identification of commercial content and offer parental controls that allow parents to limit access to such content.
Given the importance of this issue to our audience, we intend to do a future deeper dive on the report. So stay tuned for that. But you can find a copy of the report here. But to be clear, these are general staff recommendations as to how marketers can avoid blurred advertising which has the potential to violate the FTC Act. They are neither rules nor regulations.
So what did the commissioners have to say about this? All three commissioners emphasized strongly that the onus of addressing this issue cannot be placed solely on parents. Chair Khan analogized this to the concerns the FTC is raising about “notice and choice” in the privacy landscape where there is too much onus on consumers. Commissioner Alvaro Bedoya stated that this is a subject of keen interest to him, and we will note that he has spoken a lot about it. He emphasized that it was important to look at the broader context of concerns being raised about the impact of too much online time on teen mental health. He also observed that the FTC is adapting to these changing practices by hiring experts and would soon be adding a psychologist to its ranks. And Commissioner Rebecca Slaughter emphasized that advertising is not bad and supports all sorts of good things – but kids have less-developed brains, and parents alone aren’t the solution here.
There was one other topic on the agenda – a policy statement regarding the improper listing of patents in the Food and Drug Administration’s publication of Approved Drug Products With Therapeutic Equivalence Evaluations, commonly known as the “Orange Book.” This topic is a bit far afield from the subject of this blog, but for those keeping track – the policy statement was issued, and you can get more information here.
And the usual crowd of commenters kicked off the meeting, with each given two minutes to discuss their issue of the day. We do in fact get many repeat customers. But before they had that chance, we had a special message from Senator Chuck Schumer. In a video message, he discussed concerns about a particular energy drink that he believes is being targeted to children and urged the FTC to investigate the company for potential FTC Act violations. From the non-senators, we covered a lot of different topics: a recent FTC statement prohibiting third-party lead generation for robocalls; grocery mergers; e-commerce platforms, hospital mergers, and franchise issues. A representative from the U.S. Chamber of Commerce discussed a petition the organization just filed to update the FTC’s recusal processes with respect to administrative matters.
I have made this observation time and again, but I still don’t understand the point of announcing in general terms what will be discussed at these meetings without providing the details. We heard from a few people about advertising to kids, but I am sure many more people would engage and in a more helpful manner if they actually knew what the FTC was considering recommending about the issue. It’s just hard not to view this as a waste of time that could – if done correctly – reflect actual transparency and meaningful public input. And how on earth can people ask the Commission to vote out a report without any idea as to what is actually in that report? That completes my venting for the day. Possibly.
Finally, we do have a bit of breaking news. Two new potential Republican commissioners – Melissa Holyoak and Andrew Ferguson – were nominated to the Commission, and they will have their confirmation hearing on Sept. 20. Although not announced, Commissioner Slaughter will likely join them, as she has been renominated for another go-round as commissioner. And needless to say, we anticipate that if and when the new commissioners are confirmed, these public meetings might become a bit more interesting, with commissioners presenting varying viewpoints.