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Uncertainty After FEC Holds Hearings for Online Ad Disclaimers

cmdi | Mon Jan 23, 2023

At the end of June, the Federal Election Commission held a two-day hearing on the proposals to change the definition of “public communications” and require disclaimers on internet communications. The Commission heard from 18 witnesses representing think tanks, political parties and committees, research institutions, vendors, and trade associations from the advertising industry. None of the major internet platforms sent witnesses.

By the end of the hearings, it was apparent that no clear consensus could be reached. Each witness brought up different issues and opinions that emphasized the complexity of adding a new disclaimer regime to internet ads. Some witnesses challenged the FEC’s authority to require disclaimers on internet ads, and others urged the Commission to extend regulations to issue ads. Several supported requiring advertisers to maintain digital libraries that are similar to FCC requirements for television stations accepting political ads. Many witnesses from both sides of the aisle expressed concerns that rules needed to be flexible enough to apply to many different platforms as well as future technology.

While Commissioners expressed a desire to release a final rule before the end of the summer, it is unclear if that is practical and what portions of the two proposals will be included. As Eric Peterson wrote in an editorial at the Washington Examiner, there is a desire for compromise:

It was clear that two factions on the commission had major doubts about the other’s approach. But a compromise proposal seemed to intrigue both sides. This compromise would require either a full disclaimer or an icon allowing the user to see more information about the sponsor.

The commissioners seemed to agree on a need for a new rule. But it’s unlikely that any proposal will be agreed to and implemented before the midterms. Yet, despite the lack of a new rule, online political ads are already much more heavily regulated than they were in 2016.

Because the Commission is down to four members, any rule changes must be unanimous. Given the range of concerns and opinions mentioned below, the Commissioners face a challenge in drafting final rules that can be supported by everyone.

Concerns about online disclaimers:

FEC’s authority might be limited under Citizens United.  The first day of the hearings started with Allen Dickerson from the Institute for Free Speech questioning if Citizens United vs. FEC prohibited the FEC from making a rule on video ads on the internet. However, Paul S. Ryan from Common Cause disagreed and said that Citizens United upheld disclaimers for 10-second ads and did not prohibit regulation of video ads on the web. He also endorsed extending the “stand by your ad” requirements to online video ads.

Disclaimers can limit free speech. Several organizations raised concerns that additional disclaimer requirements may stifle free speech. Ilya Shapiro from the Cato Institute, testified that disclosure requirements cause anxiety for speakers while voters don’t find them helpful. Dan Backer from the Coolidge-Reagan Foundation, and Victor E. Bernson, Jr. from American for Prosperity both claimed that disclaimers provide unfavorable advantages to wealthier candidates and activists who can afford to hire attorneys.

Requirements might shut out political ads. Chris Nolan from Spot-On, an ad-buying vendor, feared that additional disclaimer requirements might cause both vendors and internet platforms to reject political ads and supported California’s model of using a political badge. Her concerns are justified after recent state laws prompted Google to ban political ads in the states of Washington and Maryland because regulatory requirements were too burdensome. Linkedin and Bing recently announced that all political ads were prohibited.

Support of online disclaimers:

Disclaimers educate voters. On the flip side of the view that disclaimers limit free speech, some witness praised them for educating voters. Christine Bannan from the Electronic Privacy Information Center supported expanding the same requirements for traditional media to the internet so that voters know why they are being targeted and who is paying for ads.

Disclaimers prevent voter suppression. Carmen Scurato from the National Hispanic Media Coalition, Asian Americans Advancing Justice, and Color of Change testified that a lack of disclaimers on social media platforms used on mobile devices can be used to suppress voters.

Disclaimers prevent foreign interference. While this point was debated since most of the ads placed by Russia were issue ads and not always subject to regulation by the FEC, Brendan Fischer from the Campaign Legal Center testified that disclaimers help regulatory agencies and watchdog organizations “uncover foreign actors.” This was echoed by Craig Holman from Public Citizen, who believed that a lack of disclosure allows foreign intervention into US elections.

How disclaimers should work:

Disclaimers should be flexible. Doug Hochberg from the RNC urged the FEC to make disclaimers adaptable to new technology and establish regulations that differentiate them from television. His sentiments were echoed by Theodore Peterson from the NRCC and Thomas Reiker from the NRSC that regulations should prioritize flexibility that can be applied to new technologies.

Disclaimers should have a label or indicator. Numerous witnesses supported using some type of signifier or indicator to mark ads as political. Berin Szóka from TechFreedom supported using the label “political ad” with hover text that included the disclaimer. Dave Grimaldi from the Interactive Advertising Bureau supported expanding the “AdChoices” signifier to political ads, which would allow the advertising industry to partner with the FEC to enforce disclaimers. Other witnesses that supported the “paid political ad” label or indicator included Carmen Scurato from the National Hispanic Media Coalition, Chris Nolan from Spot-On, and Christine Brannan from EPIC.

Debate over disclaimers on the face of the ad vs. one-click away. Both sides of this issue were raised numerous times by witnesses. Some witnesses, such as Fischer from Campaign Legal Center believe that disclaimers on the face of the ad are important to educate voters. He expressed that any exemptions should be narrow, and “one step must only be one step.”

Brannan from EPIC also believed that one-click disclaimers undercut their effectiveness since the average click-through-rate for ads is under 1%. Ian Vandewalker from the Brennan Center for Justice also believes that ads should be “portable,” meaning that if they are shared, such as in a Facebook post, the disclaimer should also be included.

Experiment with disclaimers through 2020. Several of the witnesses urged the FEC to allow for a period of experimentation for the next few years. Hochberg from the RNC encouraged that the FEC “let the market decide.” Berin Szoka from TechFreedom also suggested that the FEC have a trial period through the 2020 election to allow the advertising industry to adjust to new regulations and educate voters.

Suggestions for additional regulations:

A financial threshold should trigger ad requirements. Vandewalker from the Brennan Center for Justice advocated that disclaimer rules should be broad to apply to the entire internet and “vigorously enforced.” He supported three steps:  no exceptions since platforms are better able to provide disclaimers now, production costs should trigger disclaimer requirements, and “disclaimers should be portable.” Backer from the Coolidge-Reagan Foundation also supported a financial threshold that triggers disclaimers. However, he believes it should be based on the amount of the expenditure, which would help narrow the gap between rich and poor advertisers.

Maintain a Digital Library of Political Ads Craig Holman from Public Citizen advocated for requiring platforms to maintain an online library of all political ads that are purchased on their networks and sites. This idea stems from the requirement in the Communications Decency Act that requires television stations to maintain a “public file” of political ads. Recently, Facebook rolled out a similar library, and Google has pledged to start something similar.

Expand disclaimers beyond express advocacy. Scurato also urged the Commission to expand the definition of “public communication” to “placed or promoted for a fee” so that disclaimers also apply to user-generated content and influencers who have been paid to promote content. She would also like to see disclaimers extended to services like Netflix.