Compliance with FTC Online Advertising Requirements: A Guide for Children’s Content Creators
by Mitchol Dunham and Will Hanisch
The importance of proactive compliance based upon the FTC’s various requirements was highlighted by the recent FTC settlement with YouTube and Google violations of the Children's Online Privacy Protection Act (“COPPA”). This article will address one of the main topics that content creators must focus on: advertising disclosure standards.
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Children content creators must abide by the FTC’s “truth-in-advertising standards” when advertising to children or marketing child-related products to parents. Most of the FTC advertising requirements focus on disclosures and transparency about any relationship between the content creator and advertisers (often referred to as “brands” in the influencer marketing industry). Adequate disclosure is both necessary and important any time a content creator promotes a product, but the need is greater when advertising to children. The FTC’s fear is that children will not be able to understand the difference between advertisements and original content. Children’s creators would be well-advised to follow the guidance released by the Children's Advertising Review Unit (“CARU”) of the Council of Better Business Bureaus. The full guidance can be found here, but see our summary of the key points below in regards to how they apply to children’s content creators.
1. Advertisements cannot be unfair or deceptive. The FTC defines a representation, omission, or practice as “deceptive” if it is likely to mislead consumers and affect consumers’ behavior or decisions about the product or service. A practice is “unfair” if the injury that the practice causes, or is likely to cause, is substantial, not outweighed by other benefits, and not reasonably avoidable. In practice, unfair and deceptive trade practices are relatively intuitive. For example, a content creator who is endorsing a product in a video after organically discovering and reviewing the product is vastly different than a content creator that received a product from a brand for the purpose of integrating it into a sponsored video. Unless explicitly disclosed, an advertiser-promoted video can easily be confused for non-sponsored content. Without adequate disclosure, a sponsored video could run afoul of the FTC’s unfair and deceptive trade practice requirements.
CARU guidance is incorporated into the guidance offered by the FTC. CARU promotes a self-regulatory program to ensure safe advertising practices for child-directed content. CARU suggests considering the "net impression" of the advertisement to make sure that express and implied claims, omissions, and the overall format are not misleading to the targeted children. Whether an ad is misleading is determined by considering how a reasonable child, of the intended audience, would interpret the message. The child’s level of experience, sophistication, and maturity; limits on their cognitive abilities; and their ability to evaluate the advertising claims should all be taken into consideration when determining if your content is misleading.
2. Creators should be careful with product claims and presentation. CARU guidance recommends being aware of whether a product's characteristics and benefits are as described. This includes product descriptors. When describing a product, creators should not embellish or otherwise distort a product’s characteristics or benefits. Descriptions should be made in a manner that is understandable to the children who watch the content. Creators should not unduly exploit a child's imagination. Exaggerating or creating unattainable performance expectations must be avoided. Furthermore, advertisements should show how a child could actually use the product.
3. Disclosures should match the advertising format and media used. If a claim is made via an audio or graphic format, the disclosure must be made in the same audio or graphic format. Disclosures are necessary when advertising unassembled products, items that are not included, products that are sold separately, and when a phone call is necessary for the purchase. A simple way to think about this is if an additional step is necessary before the child can use the item as advertised, those steps must be disclosed.
4. Creators must be wary when they specifically endorse a product. There are two key concepts when it comes to endorsements. First, if a celebrity is used to promote a product, and that celebrity might significantly alter a child's perception of the product, the advertisement must attempt to dissuade any impression that the product enhanced the celebrity's performance. In other words, the advertisement must ensure that children realize that the celebrity did not become a celebrity only because of using the product. Similarly, the child must understand that the child will not become a celebrity simply because they purchase the product. Second, personal endorsements must reflect the actual experiences and beliefs of the endorser.
5. Children may have difficulty distinguishing between program content and advertisements. To avoid ambiguity, a character or personality associated with the content of a channel should not be used to sell products, premiums, or services in the program content, unless the content creator makes clear that an ad is being presented. This probably applies to every content creator on You Tube, which means it is vitally important to make fulsome and descriptive disclosures when promoting a product on your channel. Honesty and transparency are the most important ways to protect the audience and the creator.
The contents of this article do not constitute legal advice and are meant to act as an invitation to facilitate a discussion about your channel’s FTC compliance strategy. If you are unsure if your channel is compliant with the FTC requirements, please consider reaching out to the GreenRoom Legal team. This posting may constitute attorney advertising.