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New Liabilities?

Consumer, Industry Groups Clash Over FTC Influencer Rules

The FTC should avoid injecting new, unsubstantiated liability into potential changes to its ad endorsement guidelines, advertising groups told the agency in comments due this week (see 2207250036). Consumer advocates urged the agency to hold strong on expanded definitions for social media influencers and new protections for children and teens. The FTC collected public comment through Monday on its first substantive update to the guides since 2009.

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The proposed changes are “overall” a welcome addition that generally considers industry best practices and leaves room for innovation, the Computer & Communications Industry Association commented. CCIA recommended the FTC further refine its definition of “intermediaries” to limit liability for social media platforms, which it said don’t play an active role in influencer content the way advertisers do. Liability “should end where privity ends; any discussion of reaching beyond that relationship should not be adopted,” CCIA said.

The agency should update the guides without introducing “entirely new theories of liability” best suited for enforcement action, the Association of National Advertisers commented: The guides shouldn’t be used to communicate to industry the “policy interests of the commission.” ANA said the commission might think it’s providing only guidance on how FTC staff interprets language, but the guides have new policies that aren’t “applications of existing law but rather policy choices not supported by empirical evidence about how consumers understand customer reviews.” For example, there’s no basis for “believing that every customer review is an endorsement or should be viewed through the same lens as endorsements,” ANA said.

Common Sense Media urged the FTC to take a “more aggressive” approach to protecting children and teens by banning targeted ads and content marketing for those age groups. Fairplay recommended the agency identify specific techniques and practices that should be banned for child audiences. Fairplay filed comments jointly with several other organizations, including the Center for Digital Democracy, Consumer Action, Consumer Federation of America, Public Citizen and U.S. PIRG. Young users don’t always understand the significance of the word “sponsored,” they said, arguing against the impacts of “stealth advertising.”

Stealth marketing includes “advertising techniques that manipulate a child’s developmental vulnerabilities to encourage purchases or engagement with digital products, as well as techniques that blur the lines between marketing and children’s pleasurable experiences with online games or videos,” said the groups. Consumer Reports asked the commission not to “backtrack on the stronger language included in the proposed changes in response to complaints from industry.” CR credited the commission for its “more specific and realistic requirements” for meaningful “clear and conspicuous disclosures” to consumers and for “updates tailored to influencer marketing and related tactics on social media.” CR recommended the FTC clarify liability for social media platforms, saying the platforms may be responsible for unfair or deceptive practices due to offering “inadequate disclosure.”

The FTC should pay special attention to social media ads’ impacts on younger children, BBB National Programs commented. BBB National Programs, a nonprofit overseeing industry self-regulatory programs, cited foundational principles followed by its Children's Advertising Review Unit: “Advertisers should take into account the limited knowledge, experience, sophistication, and maturity of the child audience to which their advertising is directed.”

Influencer ads in digital advertising provide “significant value,” and the FTC’s guides should recognize the role of self-regulation, the Interactive Advertising Bureau commented. The agency should directly endorse industry self-regulation in its final guidelines to enable flexible industry response to “market and technology-driven changes,” IAB said. Any expansion of the definition for endorser should be limited, the Entertainment Software Association commented. ESA noted the FTC’s current guides appropriately require disclosure only when it might “materially affect the weight or credibility of the endorsement,” instead of requiring disclosure every time there’s a connection between endorser and product seller. The industry’s target audience has become sophisticated and consumers more likely to understand and expect influencers received incentives when reviewing products, ESA said: “ESA discourages any broader expansion of the definition that could impede the important context-specific evaluation of whether a disclosure is required.” ESA asked the agency to consider disclosure terms beyond “sponsored” and “ad” like “ambassador” and “affiliate link.”