The Federal Trade Commission (FTC) has taken action against social media and video streaming companies to address the growing issue of fraud on their platforms. The commission has issued orders to eight companies, including Meta Platforms, Instagram, YouTube, TikTok, Snap, Twitter, Pinterest, and Twitch Interactive, requesting information on their policies for scrutinizing and restricting paid commercial advertising that may deceive or expose consumers to fraudulent products, financial scams, counterfeit goods, or other forms of fraud.
According to the FTC, consumers have reported losing over $1.2 billion to fraud on social media platforms in 2022 alone, making it the most common method for fraud in recent years. The commission is also seeking information on how these companies ensure that consumers can identify commercial advertising on their platforms.
The orders will collect information on the companies’ standards and policies related to paid commercial ads, including their processes for screening and monitoring compliance with those standards and policies. The companies are also required to report their ad revenue, the number of ad views, and other performance metrics, including those for ads related to categories of products and services more prone to deception.
Platform Oversight of Advertisers
The study aims to shed light on the effectiveness of the platforms’ oversight of advertisers, including whether they treat English and Spanish language ads differently. Additionally, the commission seeks information on how these platforms help consumers distinguish advertising and other commercial messages from other types of content.
The orders will also investigate how social media and video streaming companies create ads, including their use of generative artificial intelligence, and track and classify ads, as well as the ad formats offered to advertisers, including shoppable ads and virtual reality and other extended reality ads.
“A Gold Mine for Scammers”
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stated that “social media has been a gold mine for scammers who tout sham products and other scams that have cost consumers enormously in recent years.” He added that the study would help the FTC ensure that these companies are doing everything possible to keep scammers and deceptive ads off their platforms.
By issuing these orders, the FTC aims to better understand the prevalence of deceptive advertising on social media and video streaming platforms, the consumers who may be harmed by it, and the effectiveness of the platforms’ oversight of advertisers.
SOURCE: FTC