FTC to Probe TikTok, Twitter, Meta, YouTube Over Deceptive Ads

The commission voted 4-0 to issue orders under FTC Act Section 6(b). The orders will help the commission understand how incentives for social media engagement clash with incentives for platforms to root out online fraudsters, said Chair Lina Khan. The orders will provide a good example of how 6(b) studies help inform agency enforcement, said Khan. FTC Commissioner Christine Wilson said 6(b) orders allow the agency to understand modern technology, but she questioned whether the commission is stretching its resources too thin, given the multitude of parallel rulemaking and 6(b) efforts.

“I strongly support the study,” said Khan. “A lot of the FTC’s work has uncovered that major social media and video streaming platforms have become a significant vector for misleading ads, financial scams and other types of fraud.” It’s important to understand why fraud is “proliferating on social media” and the root causes the agency should be addressing, she said. “Several platforms that are earning their revenue, at least in part, through behavioral advertising could potentially be incentivized to be focusing on user engagement in ways that are not always aligning with interest in rooting out fraud and deceptive content.” Sometimes platforms will “turn a blind eye” because it’s in their “material, short-term” interests to do so, she said.

With the surge in deceptive and fraudulent ads on social media, the study’s topic will be beneficial to consumers, but it’s going to require “significant resources,” said Wilson. She noted the agency already has one 6(b) study underway focused on social media and video streaming, a second study on pharmacy benefits managers, a third on healthcare facility mergers and a fourth on supply chain disruption. The commission’s workload includes a rulemaking on data security, a second rulemaking on unfair or deceptive fees associated with trade regulation and a third on children’s privacy, she said, noting the children’s study was launched more than three years ago. “We do, in fact, have limited resources,” she said. “I would hope that the commission’s law enforcement efforts will not be diluted too significantly by the expenditure of resources in so many other areas.” She suggested the agency share with the public how many full-time employees are being allocated for each 6(b) study and rulemaking effort.

It doesn’t take a “meticulous, well-crafted” study to conclude that too many paid online ads are “obnoxious and scammy,” said Commissioner Rebecca Kelly Slaughter. “But the study will help us understand why that is.” It will provide information on where platform efforts are falling short in terms of removing scams that pose real danger to users, like financial scams and health misinformation, she said. It’s good the agency is paying particular attention to Spanish-language content because there’s reason to believe platforms provide fewer resources to teams monitoring Spanish-language fraudsters than teams devoted to English-language content.

Commissioner Alvaro Bedoya said he’s looking forward to findings about Spanish-language content, which has been a priority for him since joining the commission. Without Spanish-language staff, fraudulent content runs rampant for this population, he said. He noted major platforms “refused” to answer questions about Spanish-language staff when testifying before Congress. “We hopefully will finally be able to get answers,” he said.

The orders are limited to paid commercial advertising practices, ads that promote products or services, and ads for which platforms receive payment or compensation to publish, said FTC attorney Laura Sullivan. The study will examine practices between 2019 and 2023 to allow the agency to look at relevant business practices before and after the COVID-19 pandemic, she said. The proposed orders seek written responses from the companies and data about ad revenue and ad viewership. The agency is particularly interested in ads in subject areas known for deception, including substance abuse, weight loss products, multilevel marketing businesses and cryptocurrency. The orders seek “targeted” documents including guidance and training materials, business strategy and planning documents and ad system auditing information.