FTC Eyes a Crackdown on ‘Steath’ Advertising that Target Kids

The Federal Trade Commission held an event Wednesday focused on the problem of “stealth” advertising in content geared towards children, where it’s difficult to differentiate between marketing and regular content. In the opening hours of the day-long event, the commission provided a glimpse into its thinking on the issue, and indicated that new regulatory efforts may be on the horizon.

“When kids interact with digital media, they’re exposed to an array of marketing practices that blur the line between advertising and entertainment. That’s an especially serious issue when we’re talking about young people,” FTC chairperson Lina Khan said at the event. “Developing brains are more susceptible to deceptive or harmful practices, and the immediate, and long-term effects can be significant.”

Khan said the FTC is exploring an update to the rules for implementing the Children’s Online Privacy Protection Act (COPPA). The commission is already in the process of updating its rules about commercial surveillance more broadly.

The lines between advertising and entertainment are hazier than ever before. The rise of influencers provides a wide swath of examples in which regular content is often indistinguishable from paid promotions. TikTok, for one, has made a considerable effort to push influencers as a marketing opportunity, and the platform recently rolled out several advertising techniques that make it harder to recognize when you’re watching an ad. The problem crops up in games and other apps as well, where developers pressure users into making in-app purchases.

Advertising isn’t just hard to detect, it’s increasingly hard to define, Khan warned.

“What particularly concerns the FTC is the fact that kids often cannot tell the difference between ads and organic content,” Khan said. Among the potential threats, Khan highlighted ads that intentionally exploit kids’ insecurities, and the fact that children can end up making transactions or providing personal information without realizing it or understanding the risks.

The business of kids’ advertising has been on the federal government’s radar for the decades, but regulators have often been stymied in their attempts to address the issue.

In the late 1970s, the FTC actually banned all TV advertising to kids younger than 8, and prohibited certain kinds of ads aimed towards older children. The move was controversial, and congress revoked the FTC’s rulemaking authority on children’s advertising in 1980. The Federal Communications Commissions (FCC) has some authority over kids advertising, and actually limits the amount of minutes per hour that can be spent on ads on children’s television. Even there, kids shows that built around certain toys (think of the Smurfs or Transformers) are an exception as long as they’re not literally ads.

But the law that gives the FCC that authority only applies to TV, and doesn’t address online video or other kinds of digital content. That leaves regulators with few tools to regulate kids’ media in a moment where the amount of content available to young people is growing at an exponential rate.

It’s a problem that’s way bigger than kids’ issues. Few rules govern the internet, especially at the federal level. Lawyers and regulators are left to try and fit the few, antiquated laws on the books to a digital world that’s moved way beyond what legislators have been able to cover.

COPPA is the only federal law that defines what content is directed at children, according to Mamie Kresses, vice president of the Children’s Advertising Review Unit at BBB National Programs, who spoke at Wednesday’s event. That leaves the FTC with a blunt instrument with which to address the problems in kids ads. COPPA is a privacy law, not an advertising law, though the ads and privacy are inextricable online. It remains to be seen how far the FTC can stretch the boundaries of its authority to address these problems.

Protecting children online is one issue everyone seems to agree on, regardless of political affiliation. Legislators across the globe have passed and proposed a number of laws on the issue in recent years. The UK’s Children’s Code earned TikTok a potential $29 million dollar fine this year, and California just passed a similar law this year.

So far the FTC has been characteristically vague about its plans for further regulation, but the commission is clearly eager to crack down on what it sees as manipulative and potentially dangerous advertising. They may have new avenues to pursue that kind of enforcement in the near future.

The Federal Trade Commission held an event Wednesday focused on the problem of “stealth” advertising in content geared towards children, where it’s difficult to differentiate between marketing and regular content. In the opening hours of the day-long event, the commission provided a glimpse into its thinking on the issue, and indicated that new regulatory efforts may be on the horizon.

“When kids interact with digital media, they’re exposed to an array of marketing practices that blur the line between advertising and entertainment. That’s an especially serious issue when we’re talking about young people,” FTC chairperson Lina Khan said at the event. “Developing brains are more susceptible to deceptive or harmful practices, and the immediate, and long-term effects can be significant.”

Khan said the FTC is exploring an update to the rules for implementing the Children’s Online Privacy Protection Act (COPPA). The commission is already in the process of updating its rules about commercial surveillance more broadly.

The lines between advertising and entertainment are hazier than ever before. The rise of influencers provides a wide swath of examples in which regular content is often indistinguishable from paid promotions. TikTok, for one, has made a considerable effort to push influencers as a marketing opportunity, and the platform recently rolled out several advertising techniques that make it harder to recognize when you’re watching an ad. The problem crops up in games and other apps as well, where developers pressure users into making in-app purchases.

Advertising isn’t just hard to detect, it’s increasingly hard to define, Khan warned.

“What particularly concerns the FTC is the fact that kids often cannot tell the difference between ads and organic content,” Khan said. Among the potential threats, Khan highlighted ads that intentionally exploit kids’ insecurities, and the fact that children can end up making transactions or providing personal information without realizing it or understanding the risks.

The business of kids’ advertising has been on the federal government’s radar for the decades, but regulators have often been stymied in their attempts to address the issue.

In the late 1970s, the FTC actually banned all TV advertising to kids younger than 8, and prohibited certain kinds of ads aimed towards older children. The move was controversial, and congress revoked the FTC’s rulemaking authority on children’s advertising in 1980. The Federal Communications Commissions (FCC) has some authority over kids advertising, and actually limits the amount of minutes per hour that can be spent on ads on children’s television. Even there, kids shows that built around certain toys (think of the Smurfs or Transformers) are an exception as long as they’re not literally ads.

But the law that gives the FCC that authority only applies to TV, and doesn’t address online video or other kinds of digital content. That leaves regulators with few tools to regulate kids’ media in a moment where the amount of content available to young people is growing at an exponential rate.

It’s a problem that’s way bigger than kids’ issues. Few rules govern the internet, especially at the federal level. Lawyers and regulators are left to try and fit the few, antiquated laws on the books to a digital world that’s moved way beyond what legislators have been able to cover.

COPPA is the only federal law that defines what content is directed at children, according to Mamie Kresses, vice president of the Children’s Advertising Review Unit at BBB National Programs, who spoke at Wednesday’s event. That leaves the FTC with a blunt instrument with which to address the problems in kids ads. COPPA is a privacy law, not an advertising law, though the ads and privacy are inextricable online. It remains to be seen how far the FTC can stretch the boundaries of its authority to address these problems.

Protecting children online is one issue everyone seems to agree on, regardless of political affiliation. Legislators across the globe have passed and proposed a number of laws on the issue in recent years. The UK’s Children’s Code earned TikTok a potential $29 million dollar fine this year, and California just passed a similar law this year.

So far the FTC has been characteristically vague about its plans for further regulation, but the commission is clearly eager to crack down on what it sees as manipulative and potentially dangerous advertising. They may have new avenues to pursue that kind of enforcement in the near future.