At a Federal Trade Commission (FTC) event last week, Chair Lina Khan said children are more susceptible than adults to deceptive or harmful practices, especially those that blur the line between advertising and entertainment.

The event, “Protecting Kids from Stealth Advertising in Digital Media,” included legal and child development experts, researchers, members of industry, and consumer advocacy groups. Together they discussed children’s development and ability to detect and understand advertising, the potential harms to children from blurred, deceptive, or manipulative advertising practices as well as the ways to mitigate them, and the significance of effective disclosures.

In her opening remarks, Khan said children often are unable to understand the difference between advertisements and organic content. Without realizing it they may end up engaging in commercial transactions or provide companies with their personal information without comprehending the privacy risks. Khan also noted that the FTC is considering whether to update its Children’s Online Privacy Protection Act (COPPA) Rule, which has not been updated since 2013, and requested comments on its advanced notice of proposed rulemaking related to commercial surveillance.

Mamie Kresses, vice president of the BBB National Programs’ Children’s Advertising Review Unit (CARU), said in a presentation that advertisers should not blur advertising with non-advertising (e.g., entertainment) content.

To avoid allegations of manipulative tactics, according to CARU’s guidance, advertisers in the digital media space should not deceive children to make purchases or view ads, should make it clear in advertisements, applications, and games when purchases are made with real money, should use clear and conspicuous exits to ads, and should not use endless ad and purchase loops. Advertisers should use conspicuous disclosures in the same format or medium used (e.g., if an ad uses audio and video, then disclosure should use audio and video), repeat them periodically in ads longer than a few minutes, and ensure that they are consistent with and do not contradict the rest of the advertisement. Also, an influencer that works with an advertiser must clearly and conspicuously disclose that material connection in a way that children can understand.

During a panel on children’s cognitive abilities, several speakers emphasized that kids at different ages learn at different rates, have a general desire to believe that companies are trying to help or support them, have differing understanding of digital media, and may be affected by other factors (e.g., socioeconomic and neurodiversity statuses).

“If there aren’t mechanisms that support children to protect them from being manipulated or being deceived, we will find ourselves arguing that children need to become distrustful and skeptical of everything, which I don’t think is in a company’s interests, certainly not in children’s best interests,” said Sonia Livingstone, a professor of social psychology at the London School of Economics.

In a panel about how the current advertising landscape is impacting children, industry experts and advocates discussed the manner and magnitude of kids’ exposure to “blurred” advertising—through influencer-sponsored messages on social media and YouTube; virtual product placement in movies, TV shows, and games; funny online memes or inspirational articles; and emerging virtual environments like the metaverse.

Girard Kelly, senior counsel at Common Sense Media, reported that children aged 8 to 12 use about 5.5 hours of screen media per day, while children aged 13 to 18 use about 8.5 hours of screen media per day, which translates to a large volume of advertising exposure.

Josh Golin, executive director at Fairplay, emphasized a distinction between simply recognizing that an ad is an ad, and processing the ad. He and other panelists said children had to “defend” themselves from advertising, and that simply recognizing an ad without processing it is not enough to defend themselves.

James Cooper, an economist on the panel, cautioned against such a perspective. He said advertising is protected speech under the First Amendment because it provides benefits and useful information to consumers, and that it should not be seen as harmful just because it works. Cooper stressed the need for causal, “but-for” evidence showing that children exposed to advertising behaved differently than a control group, and to avoid the assumption that exposure to advertising in and of itself is harmful.

However, most panelists agreed that exposure to so much digital advertising is causing a range of psychological, physical, and economic harms to children and their families. Thus, the panel was split on whether the FTC Act’s “unfairness” authority sufficiently covers the harms to children caused by blurred advertising. For an act or practice to be “unfair” under the statute, it must cause, or be likely to cause, substantial injury to consumers that is not reasonably avoidable, and is not outweighed by countervailing benefits to consumers or competition. At the conclusion of the discussion, the panelists were split between those who thought the harms are plentiful, and others who did not believe there was enough causal evidence of injury to be deemed unfair under the FTC Act.

The third and final panel considered solutions to the problems stemming from digital advertising to children. Bonnie Patten, the executive director at Truth In Advertising, proposed that an effort to provide distinct separations between content and advertising, and to “take the stealth out of the marketing,” could be effective.

Lartease Tiffith, executive vice president of public policy at the Interactive Advertising Bureau (IAB), argued that the onus is on content creators to demonstrate to the audience that they are receiving an advertisement. Josh Blumenfeld from YouTube disagreed, saying platforms are best positioned to create and design effective methods to ensure ads are recognized, but that guidance from the FTC on policy objectives and best practices would be useful.

Sneha Revanur, the founder and president of Encode Justice, said disclosures and ad recognition are not enough, and that we need a “robust public awareness and educational effort” to ensure children know how to navigate the modern, complex digital world as responsible consumers. She believed the FTC had a role to play in such efforts.

Finally, some panelists cautioned against sweeping rules that essentially prevent children’s exposure to advertising. They said ads ultimately monetize content and allow it to be free. Without ads, the amount of content would decrease and most content would have to be reserved for paid subscribers. One panelist pointed out that this would unfairly impact children of lower socioeconomic status, and that many kids would miss out on positive and educational content.

Lartease Tiffith of IAB said the industry is already doing a lot to ensure ads are being delivered responsibly, and that the FTC should focus on going after the few bad actors rather than using rulemaking to change the industry and “be the nanny and parent for everybody in America.”

In her closing remarks, the associate director of the FTC’s Division of Advertising Practices, Serena Viswanathan, expressed her hope that the FTC can provide further guidance and recommendations on complying with the law in this space. The FTC is seeking public comments on the topic of advertising to children until November 18, 2022. Those comments can be either submitted or reviewed by the public here.