CARU is concerned that in the metaverse – as well as augmented reality and virtual reality worlds – the lines between ads and content can easily get blurred. These problems are “escalated by the fact that children can directly engage in activities and interactions with character avatars and influencers, potentially creating a sense of personal connection to and trust in the messages.” This creates a “risk of manipulating children into unwittingly viewing ads or making purchases.”

To avoid this type of “manipulation,” CARU requires advertisers to ensure that they clearly disclose when something is an ad – or when someone is an influencer – in a manner that is tailored to children in the intended audience. For example, disclosures should be “unambiguous, easily noticeable, and appear in appropriate locations, with sufficient frequency, and on multiple platforms so that children are likely to see, hear, and understand them.”

In a related development, this week, the FTC announced that it was seeking “public comment on how children are affected by digital advertising and marketing messages that may blur the line between ads and entertainment.” This is related to an October 19, 2022 event on “Protecting Kids from Stealth Advertising in Digital Media” that will examine these topics, including what advertisers should do in order to distinguish ads from other content.

During the course of CARU’s routine monitoring, they found clothing on Primark’s website that included different slogans on shirts advertised to girls and boys. For example:

• Slogans on shirts advertised to girls such as “Be Kind, Be Happy,” “Kindness always wins,” “Always Perfect,” “Grateful, humble and optimistic,” and “Be good, do good.”
• Slogans on shirts advertised to boys such as "Change the game,” “Born to win,” “Power,” “Champion,” “Total Icon,” and “Awesome Adventures.”

Beyond CARU’s analysis of this new provision, this case involved some unique jurisdictional issues. The CARU Guidelines only apply to “national advertising that is primarily directed to children under age 13 in any medium.” And the term “advertising” is defined, in part as “any commercial message or messaging primarily directed to children under age 13… that promotes the sale of one or more products or services.”

Primark argued that the CARU’s concern related to products, not ads for those products. CARU disagreed, finding “that the messages on the clothing are indeed commercial messages whose purpose is to promote the sale of the clothing.” Moreover, CARU disagreed with Primark’s argument that the clothes were advertised to parents, who are the purchasers, rather than to children. They held that the “messages are designed to be attractive to kids who are enticed by their colorful and eye-catching advertising messages and will want the clothes and urge their parents to buy them.”

This case provides some hints about how CARU is going to interpret its new provisions and suggests that they will take an expansive view of what constitutes national advertising primarily directed to children under 13. Companies that design products for children will want to keep a close eye on future decisions involving these issues to see how this line of thinking develops.

The new Guidelines, announced last week, should help. Although the core principles underlying the Guidelines are the same, there are some important updates. Here are some of the key changes:

• The new Guidelines apply to children under 13 years old across all platforms. (Previously, the Guidelines applied primarily to children under 12.)
• Whereas the previous Guidelines focused television, the new version better reflects today’s digital advertising landscape.
• The new Guidelines include a section dedicated to in-app and in-game advertising and purchases.
• The new Guidelines include new factors to help determine when an ad is primarily directed to children under 13. (The factors in the previous version were more TV-centric.)
• The new Guidelines incorporate updated FTC guidance on influencers, endorsements, and native advertising.
• The new Guidelines require that ads not portray or encourage negative social stereotyping, prejudice, or discrimination. (Recall that in a February blog post, CARU had encouraged advertisers to focus on diversity and inclusion in their ads.)

The DS-SRC will be administered by the Advertising Self-Regulatory Council (ASRC), which operates under the Council of Better Business Bureaus. This should help the new self-regulatory body achieve its goals, considering the great success of ASRC and the programs it currently administers, including the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), National Advertising Review Board (NARB), Electronic Retailing Self-Regulation Program (ERSP) and Online Interest-Based Advertising Accountability Program (Accountability Program.).

Peter Marinello, Vice President of CBBB, will serve as Executive Director of the DS-SRC, and will oversee the program and its staff. Additional staffing will include a senior legal analyst, and a staff attorney. DS-SRC may utilize monitoring services at its discretion, and in consultation with the Direct Selling Association (DSA).

DS-SRC’s will have jurisdiction over the following:

• Independent monitoring of the direct selling marketplace;
• Matters referred by the DSA Code Administrator based on a pattern and practice of complaints identified, or pursuant to media reports, or matters identified by consumers;
• Matters raised by competitor challenges;
• Inquiries received from distributors, customers and other users of direct selling companies products or services; and
• Complaints from Better Business Bureaus directed to DS-SRC.