Podcast - The FTC Takes a Closer Look at Blurred Advertising to Children

Good day and welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goals in these podcasts is to make you succeed in this very aggressive environment, make you aware of what's going on with the consumer protection agencies and give you practical tips for success. As always, it's a privilege to be with you today.

The FTC's Serious Concerns of Advertising to Children

Today we discuss the Federal Trade Commission's interest in advertising to children. A new FTC staff paper recommends that businesses, social media influencers and others who market or promote products online to children should avoid blurring advertising by clearly separating advertising and entertainment, educational and other content to help limit potential harms to children. The paper further warns that for younger children in particular, disclosures are unlikely to be effective. In the document, FTC staff detail some of the main takeaways from an October 2022 workshop called "Protecting Kids from Stealth Advertising and Digital Media" the agency held that examined how blurred advertising online and in digital spaces makes it difficult for children to distinguish between advertising and other content. As Sam Levine, the FTC's director of the Bureau of Consumer Protection, said, "We now live in a world where kids spend many hours a day online, often in immersive environments where advertising and content are deliberately difficult to distinguish. The serious concerns highlighted throughout our workshop make clear that the best way to protect children from the harms of advertising is not to blur advertising." Participants at the workshop and public comments discussed research showing that many young consumers do not have the skills or cognitive defenses to identify or sufficiently evaluate blurred advertising, potentially leading to deception as well as physical, psychological, financial, privacy and other harms. Workshop participants noted that children spend a significant amount of time on gaming platforms, video channels and social media where they encounter advertisements that blend into the surrounding content. For example, children may see marketing messages in an influencer's video on social media as they travel through a virtual environment or while playing a mobile game.

The Harms of Blurred Advertising to Children

Blurred advertising allows marketers to disguise advertising, and younger consumers may not be able to avoid it or evaluate it sufficiently given their focus on the content, the staff paper noted. In addition, children may be more likely to trust such messaging, particularly if it comes from a trusted source such as a social media influencer or an avatar that they have befriended in the game. Other potential harms to kids from blurred advertising include promotion of harmful products and services — such as tobacco or unhealthy foods — financial harms from advertising prompts that lead to accidental or emotional purchases without parental approval, and increased susceptibility to blurred advertising that is targeted to children based on information collected about them or their interests. The workshop and comments made clear that there is no single approach that is sufficient to address the likelihood that children will be harmed or deceived from blurred advertising. Moreover, it is unreasonable to place the burden entirely on parents to constantly monitor their children's online interactions to the extent that entities engage in blurred advertising in spite of the inherent risks.

Five Ways to Mitigate the Harms of Blurred Advertising

Staff recommends five practices to mitigate potential harm:

1. Do not blur advertising. The best way to prevent harms stemming from blurred advertising is not to blur. There should be a clear separation between kids' entertainment and educational content and advertising, using formatting techniques and visual and verbal cues to signal to kids that they are about to see an ad.

2. Provide prominent "just in time" disclosures. Such disclosures should be provided when the product is introduced, and should be provided verbally and in writing, and explain clearly the commercial nature and intent of the messaging. Marketers, however, should not rely on disclosures alone.

3. Create icons to flag advertising. Stakeholders should work together to create and use an easy-to-understand and easy-to-see icon to signal to kids that money or free things were provided to the content creator to advertise the product.

4. Educate kids, parents and teachers. All stakeholders should look for ways to educate kids, parents and educators about how digital advertising works and help kids recognize and evaluate it wherever it appears. Education can also play an important role in helping promote and support the use of an icon to help kids understand and identify ads.

5. Platforms should consider policies, tools and controls to address blurred advertising. Platforms should consider requiring content creators to self-identify content that includes advertising through policies and tools, while offering parental controls that allow parents to limit or block their children from seeing such content.

Importantly, none of these practices alone is necessarily sufficient, and companies that engage in blurred advertising can be held liable under the FTC Act if their conduct is deceptive or unfair to children.

Concluding Thoughts

So here's the key takeaway. Be very, very aware of the techniques and approaches you take if you advertise to children. Children are one of the several target audiences that the FTC deems are vulnerable, and which the FTC gives close attention to. Compliance management is critical. Stay tuned to further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.