On Wednesday, the Federal Trade Commission (“FTC”) hosted a virtual event on “Protecting Kids from Stealth Advertising in Digital Media.”  The event featured industry professionals, legal and child development experts, researchers, and consumer advocates to discuss the regulation of digital advertising to children.  Panelists examined the online advertising techniques children are exposed to, children’s capacity to understand and recognize advertising, and the potential harms associated with advertising in an ever-evolving digital landscape.   

We summarize several key discussion points:

• Impact of advertising on children.  Panelists offered evidence that children are highly susceptible to “blurring,” which describes when an advertisement is designed to obscure the fact that it is an advertisement and instead mimics entertainment content, particularly when this content is offered by personalities such as influencers, endorsers, or avatars.

• Parental controls for advertisements.  The panelists discussed what role parents should play in taking steps to monitor their children’s online activity and whether regulations are necessary to protect children from potential online harms related to advertising.  Panelists also weighed the costs and benefits of policies that would ban or block advertisements, and policies that would require specific disclosures of advertisements, taking into consideration the economic benefits of advertisements in making online services more financially accessible for consumers.

• FTC authority to regulate advertising to children.  Several panels discussed the FTC’s authority to promulgate regulations or bring enforcement actions related to advertising to children.  Panelists discussed whether the FTC Improvements Act of 1980, which restricted the FTC from commencing rulemaking on advertising to children, could limit the FTC’s authority in the context of digital advertising to children.  In addition, panelists considered whether Section 5 of the FTC Act provides the Commission authority to promulgate regulations or bring enforcement actions concerning certain types of advertisements for children on the basis that such advertisements constitute unfair or deceptive acts or practices.  In particular, they analyzed whether harms that could arise from certain advertising practices are avoidable by parents and whether the FTC should consider psychological impacts in its analysis of whether such harms result in substantial injury to consumers, a factor that it has not considered in the past.  In addition, panelists discussed whether certain proposed requirements, if adopted by the Commission, would violate the First Amendment.

• Additional potential mitigation measures.  Panelists commented on a variety of potential solutions for increasing children’s awareness of digital advertisements, such as using a universal icon to signal when content is an advertisement and promoting public awareness and education campaigns.

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.