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What measures are taken to prevent fraudulent ads? US asks social media, video streaming platforms

The FTC order seeks info on the standards and policies related to paid commercial ads put in place by the platform, and other issues

social media apps

The US government on March 16 issued orders to eight social media and video streaming platforms seeking information on “how these companies scrutinize and restrict paid commercial advertising that is deceptive or exposes consumers to fraudulent health-care products, financial scams, counterfeit and fake goods, or other fraud,” the Federal Trade Commission (FTC) said in a press release.

Why does this matter: It will be interesting to see what comes of this as misleading and fraudulent ads have cost unsuspecting users significant sums of money, and in some cases, harmed users’ health. As an example, India’s stock market regulator recently cracked down on 55 entities that used YouTube to promote false information and inflate the share prices of two companies only to enable the fraudsters to offload the shares at the inflated prices. In the US, “in 2022 alone, consumers reported losing more than $1.2 billion to fraud that started on social media,” FTC revealed.

“Social media has been a gold mine for scammers who tout sham products and other scams that have cost consumers enormously in recent years. This study will help the FTC ensure that social media and video streaming companies are doing everything they can to keep scammers and deceptive ads off their platforms.” — Samuel Levine, Director of the FTC’s Bureau of Consumer Protection

Which platforms were sent orders: FTC sent orders to the following platforms:

  1. Meta
  2. Instagram
  3. YouTube
  4. TikTok
  5. Snap
  6. Twitter
  7. Pinterest
  8. Twitch

You can access a copy of the order here.

What all information does FTC seek to collect: The Commission seeks to collect information around the following:

  • the standards and policies related to paid commercial ads put in place by the platform
  • the processes for screening and monitoring for compliance with the policies (human review as well as automated systems)
  • ad revenue details
  • performance metrics (like the number of ad views)
  • how platforms create ads (including any use of generative artificial intelligence)
  • how are ads classified
  • the different ad formats offered to advertisers (such as shoppable ads, virtual reality ads, etc)
  • how platforms help consumers distinguish advertising and other commercial messages from the usual content (including disclosure tools available to endorsers and influencers)

The FTC is also seeking specific information “for ads involving categories of products and services more prone to deception such as those intended to treat, prevent, or cure substance use disorders and tout income opportunities.”

What time period does FTC want data for: “The orders seek information for the calendar years 2019 through 2023, which allows for the Commission to study relevant business conduct since the start of the COVID-19 pandemic,” FTC stated.

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