Khan: FTC Needs to Intervene on Multiple Kid Privacy Fronts

What particularly “troubles” the FTC is children can’t always tell the difference between ads and organic content, Khan said during an agency event on “stealth” advertising. She cited the FTC’s effort to potentially update its rule under the Children’s Online Privacy Protection Act and the agency’s broader privacy rulemaking. Some advertising is “intentionally designed to exploit children for commercial gain,” she said: Young users might engage in commercial transactions without even realizing it and provide personal information without understanding privacy risks. The question is whether existing regulatory schemes are capable of protecting children, she said.

Consumer advocates spoke on various panels throughout the day about harms of advertising. George Mason University law professor James Cooper countered their assertions, saying advertising is First Amendment-protected speech because it can provide useful information to audiences: “It’s a listener-based right. It’s not a speaker-based right.” He cautioned against assuming exposure to ads is a harm in itself: “You really have to have good causal evidence” of the harm.

Some advertising practices are “manipulative,” said Mamie Kresses, BBB national programs vice president-Children’s Advertising Review Unit. This includes ads embedded in games that trick children into assuming transactions are necessary for gameplay, she said, calling it “emotional manipulation.” Advertising “in and of itself is fine, but you need to let people know,” particularly in immersive spaces like the metaverse, said University of Georgia associate advertising professor Sun Joo Ahn.

Examples of persuasive advertising include influencer content, virtual product placement, memes spreading brand awareness and inspirational articles pitching products in a positive light, said Common Sense Director-Privacy Program Girard Kelly. He noted Common Sense research shows about 75% of children under 13 own their own tablet and more than 50% of kids ages 10-11 own their own mobile devices. Research showed kids ages 8-12 spend about five hours streaming media per day, and ages 13-18 stream media for more than eight hours a day. The products are “designed” to make it harder for users to “cognitively process marketing,” and it’s even harder for developing children, said Fairplay Executive Director Josh Golin.

Social media platforms are best positioned to create and design what’s most effective for their users, but FTC guidance on best practices would “certainly be useful,” said Josh Blumenfeld, YouTube managing director-government affairs and public policy. He noted YouTube did research on its young users and found only 10% of kids understood the phrase “includes paid promotion.” YouTube is now focused on distinct visual icons, easy-to-read text and educational videos for helping kids identify sponsored content, he said. Fluent Research President Nellie Gregorian supported using visual icons, saying children pick up on visual cues very well if they’re educated about icon meanings. An educational program would be helpful, said Lartease Tiffith, Interactive Advertising Bureau executive vice president-public policy.

Tiffith argued the onus should be on content creators, not platforms, to demonstrate to their audiences that they're showing sponsored content: “A lot of that information is held by them.” He noted the FTC recognizes in its documents for updating its endorsement guides (see 2210140050) that “this is where the enforcement should lie.” Blumenfeld agreed platforms are in a difficult position to disclose because they don’t have direct or even indirect insight into the commercial relationships between content creator and advertiser: “We really do think the onus is on the generator of the content to disclose to us what their commercial relationship is” so they can verify users are aware.