FTC Unanimously Moves COPPA, Online Influence Items at Bedoya’s First Meeting

The FTC voted 5-0 Wednesday approving two regulatory measures on children’s privacy and online influencer endorsements. Commissioner Alvaro Bedoya, who was sworn in this week (see 2205160058), cast his first votes at the agency.

The commission voted to issue amended advertising endorsements for public comment (see 2002120046). Commissioners discussed the need to keep pace with digital influencers and online platforms. The commission also approved a policy statement repeating existing Children’s Online Privacy Protection Act (COPPA) guidance on the collection of children’s data, with a specific focus on ed tech companies. During the meeting's public comment portion, the commission heard from an Obama-era senior FTC staffer who raised concerns about staff morale and culture at the agency (see 2205180047).

The amended ad endorsement guides include expanded definitions for online influencers and clear rules for prohibiting manipulation of consumer reviews, omission of bad reviews and the purchase of fake reviews. The amended guides also add a section dealing with ads targeted to children. It clarifies liability for companies and influencers. Ultimately endorsements must be “honest and not misleading,” the agency said.

It’s an important document that addresses the relationship between influencers and digital platforms, said Chair Lina Khan. Child-directed influencer advertising is of special concern, she said. The process by which the FTC issued the amended guides reflects the agency “at its best,” said Commissioner Noah Phillips. He credited leadership for giving adequate time for staff to review the document and said consumers and businesses alike will benefit from clear rules. Commissioner Rebecca Kelly Slaughter said it’s a priority for her to ensure rules are keeping pace with modern trends, including the relationship between influencers and digital platforms. Commissioner Christine Wilson thanked Khan for her “constructive approach” on the amended guides, saying endorsers need to be held to the same standards as companies selling the products. Bedoya said he’s particularly interested in children’s unique vulnerability to ad content. The FTC will host a follow-up event on the guides in October.

There’s an “alarming” disconnect between current career staff and political leadership at the agency, said former Executive Director Eileen Harrington, who spent nearly 30 years at the FTC before leaving in 2012. Saying she “parked politics at the door,” Harrington said productivity and effectiveness depend on an engaged career staff, and engagement grows from “mutual respect, collaboration and inclusion.” The recent employee survey, staff departures and staff discontent are all evidence there’s a problem, she said: “The FTC is not a failed agency, but it’s on the road to becoming one. This is a crisis” that “deserves more than two minutes” during public comment, she said. Wilson said she shared Harrington’s concerns.

Increased reliance on educational technology during the COVID-19 pandemic meant students are at increased risk of being profiled and their sensitive data misused, said Khan. The COPPA policy statement makes clear that ed tech providers can’t require parents or schools to sign off on sweeping data collection of children as a condition of children accessing educational services, she said. COPPA is a critical tool that the FTC will use “vigorously,” but it can only go so far, especially considering shifting trends in how companies collect and use data, she said.

President Joe Biden applauded the unanimous decision on COPPA. “When children and parents access online educational products, they shouldn’t be forced to accept tracking and surveillance to do so,” he said in a statement. “The FTC is making it clear that such requirements” violate COPPA and that the agency will be “cracking down on companies that persist in exploiting our children to make money.”

The COPPA policy statement is “nothing particularly new,” as it “reiterates the requirements” of COPPA and highlights existing guidance, said Phillips. Regardless, he said he's happy to support the policy statement but said the FTC should complete its COPPA rule review, which it announced in 2019 (see 1910170051).

The policy statement is “timely and even necessary,” said Slaughter. It helps clarify rules on unnecessary data collection, she said. Companies should be competing on the quality of their products, not on the exploitation of children’s data, she said.

Policy statements are issued to promote transparency and to clarify existing, enforceable rules, said Wilson: They aren’t, however, individually enforceable like rules or laws. She called it a “due process foul” to issue a policy statement on a topic for which the FTC is seeking comment, COPPA. She said she voted yes on converting staff guidance into a policy statement, which she hopes will lead to heightened protections for children.

The policy statement reinforces the original intent of bipartisan efforts to pass COPPA and is a step toward better protection of privacy rights, said Bedoya. The statement is an effort to move beyond the flawed notice and consent model, he said: “Kids have a right to learn in private.” Khan called the unanimous vote “really terrific.”