The FTC Calls on Social Platforms to Define Their Processes to Shield Customers from Scam Promotions

Scam ads could be set to come under more scrutiny, with the FTC today issuing new orders to Meta, YouTube, TikTok, Snapchat, Twitter, Pinterest and Twitch seeking information as to how they detect and restrict paid commercial advertising that’s deceptive or exposes consumers to fraudulent products or scams.

The orders specifically relate to fraudulent healthcare products, financial scams, and counterfeit and fake goods, though all scams are set to be analyzed by the new probe.

As per the FTC:

“The orders will collect information about the companies’ standards and policies related to paid commercial ads and their processes for screening and monitoring for compliance with those standards and policies, including through human review and the use of automated systems. The orders also require the companies to report their ad revenue, the number of ad views, and other performance metrics, including 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 all income opportunities.”

The FTC will then use the collected information to assess how each platform is dealing with problems related to online fraud, and could potentially lead to the development of new, universal regulations that put more money on each company to protect their users.

The process will also look at the latest ad creation offerings, including the use of generative AI, as well as how each platform’s ad targeting system works.

“In addition, the Commission seeks information on how these platforms help consumers distinguish advertising and other commercial messages from other types of content, including disclosure tools for endorsers and influencers.”

That last element could lead to more rules and enforcement around paid promotional disclosure, which has been a significant problem in social media circles for some timewhile the exploration of ad targeting systems could provide more understanding as to how new automated systems, like Meta’s Advantage+ adsactually work to determine relevant ad audiences.

The FTC says that consumers are losing more than ever to social media scams, with Victims pay a collective $1.2 billion to social media fraudsters in 2022 alone, which is more than any other medium. Transparency, visual pointers and improved education are all key elements in tackling such scams, while the platforms themselves could also, at least theoretically, be doing more to detect such operations before they can reach their users.

Which is what the FTC will now determine, and the eventual findings could have significant implications for all online advertisers, and the processes in place.

At the least, we’ll learn more about the current systems, and the depth of these issues. The FTC has issued the orders this week, with more information to follow.