This article was originally published in Venable's All About Advertising Law blog on October 1, 2015.
Huddled in front of a digital hearth on the third and final morning of the NAD Annual Conference, FTC Commissioner Terrell McSweeny participated in a cozy fireside chat about children's marketing with ASRC President and CEO, C. Lee Peeler. The newest FTC Commissioner reported (or warned!) that she is closely following the evolution of marketing and advertising to children on social media and began her chat by touching on some of the same themes that Commissioner Brill raised in her keynote address two days earlier. Namely, Commissioner McSweeny underscored the continuing relevance of the foundational consumer protection principles underlying the FTC's endorsement and testimonial guides. She emphasized that children deserve special protections when it comes to their consumption of endorsements, particularly in new and digital formats. Accordingly, the Commissioner encouraged all marketers, including those using non-traditional media, to continue to ask themselves, "would a child really understand that [an endorser has an association with the advertised product]" and "would a child really see that [on the screen]" and "is that language really clear to a child"?
Commissioner McSweeny's fireside comments revealed that she is especially interested in children's apps and the "internet of (children's) things". Regarding apps, the Commissioner expressed doubt about the ability of children to discern the line between virtual and real currency, particularly when making in-app purchases, and stated that in-app purchases can lead to very high dollar amounts charged to a parent's credit card in a short amount of time. She stated that, when children are making in-app purchases, just as in a brick-and-mortar store, parents are entitled to notice, choice and control over what is purchased with their credit card. If such notice, choice and control doesn't exist, the parent should have a way to get their money back. The Commissioner did, however, appear encouraged by app providers' attempts to improve notification to parents about their children's spending.
Regarding the "internet of things", which the Commissioner referred to as "all the [connected] stuff that isn't smartphones", Commissioner McSweeny was decidedly suspicious. Because the networked use of interactive toys and wearables potentially results in a child's protected information being collected and shared, the Children's Online Privacy Protection Act, or "COPPA", essentially requires parental consent in order to unlock item functionality. When an audience member raised the issue of interconnected toys requiring parents to take burdensome additional steps to provide consents, Commissioner McSweeny was not sympathetic. She said the methods parents currently use to provide consent are "not unworkable", and reiterated her concern about the privacy implications of the internet of children's things, and about the security of products that collect children's information. Commissioner McSweeny also explained that, perhaps because she attends hacker conferences, she is troubled by supply chain vulnerabilities that could potentially leak or otherwise expose vast amounts of data about children.
The remainder of Commissioner McSweeny's chat spanned a variety of topics ranging from children's food advertising (she receives angry letters demanding the FTC do more! And less!), to coordination between the FTC and state Attorney Generals on COPPA-related issues (she reported lots of coordination, especially at the staff levels), to whether COPPA 3.0 is in the works (not yet, that she's aware of), and developments in the U.S.-E.U. Safe Harbor Framework litigation at the European Court of Justice (the Commissioner had "no comment", but suggested the audience look out for the opinion next week).