The National Advertising Division under new head Phyllis Hurwitz Marcus will remain “intently” focused on targeting ads that exaggerate the ability or function of artificial intelligence as it relates to their product, also known as “AI washing.”
“Our view has been that consumers have a right to rely on presentations of capabilities of AI as they are shown and depicted in advertising,” rather than “when the actual capabilities aren’t yet ready for market, but are shown as if they are available now,” Marcus said during a 9 April interview with HBW Insight, in which she discussed the goals of the NAD under her watch.
Marcus, who was tapped VP of the BBB National Programs Inc. division effective 1 April, previously led the Federal Trade Commission’s children’s privacy regulatory and enforcement program and is an expert in children’s privacy issues including its intersection with areas of law such as the internet and social media, the metaverse and AI.
NAD notes on its website that AI washing refers to the practice of “overstating AI’s capabilities or the ethical rigor of AI systems without sufficient evidence or transparency.” AI washing is a derivative of the term “greenwashing” which describes the act of conveying a false impression or providing misleading information about environmental or sustainability practices.
AI washing could come into play anywhere beauty companies currently use AI. For example, beauty companies often tap AI-backed technologies to assess skin through a scan in order to recommend skin care or cosmetic products.
Marcus noted NAD has tackled several AI washing cases, “involving exaggerated claims and capabilities for AI products and we have dedicated review to issues in AI,” she said, though none of those assessments so far appear to be in the beauty space.
Loeb & Loeb LLP attorney Melanie Howard told HBW last year that companies may be able to avoid problems with AI by drafting an AI policy that addresses confidential and sensitive company information, data preservation and dissemination, performance monitoring, authorized tools, supervision, auditing, incident reporting, policy revisions, and updates and communication.
Risks Of Marketing To Consumers Under 18
Marcus also said beauty companies are struggling to tailor their marketing activities appropriately in order to be in compliance with a patchwork of state laws – including in California and Texas – addressing marketing, privacy and teens and defining minors as consumers under the age of 18.
“I was actively engaged in counseling companies in exactly this area when I was in private practice,” Marcus said. “And this is where we see a real joining together of advertising principles and privacy principles that they’ve kind of been hit square on it in the teen space,” she said.
In January, the Federal Trade Commission finalized amendments to the Children’s Online Privacy Protection Act (COPPA) rule, which strengthens parental control over children’s digital data. For the personal care and beauty industries, it provides another opportunity to ensure products are not marketed to children, said John Villafranco, partner at Kelley Drye & Warren LLP, during a recent interview.
“Typically at the federal level, we looked at the under 13 population, but with the new state laws defining children or minors as, in many cases, individuals under the age of 18, you have complications with brands trying to determine who their audiences are; it’s not clear,” Marcus said.
“It’s much harder to determine whether something is attractive to a teenage audience than it is to determine whether it’s attractive to a child audience, because at the upper edges of the teenage audience, you bled right into activities and products and engaging services that are also appealing to young adults,” she said.
“I think this is going to be an area of priority for us,” Marcus said.
She pointed to NAD’s and the Children’s Advertising Review Unit (CARU)’s joint case against New York-based firm Bubble Beauty, Inc., published 24 March.
NAD and CARU brought the assessment forward together after identifying Bubble Skincare social media posts appeared to target both adults and young girls. Bubble Skincare had initially tried to argue that its product packaging and marketing were not targeted to children under the age of 13, though NAD pointed to TikTok videos in which kids under the age of 13 are using the brand’s products.
While the divisions found the firm was able to demonstrate its Bubble Skincare cleansers, moisturizers, SPF products and limited-edition product bundles created with Disney Pixar were safe for consumers under 13, they found the firm could not support express and implied claims the products were effective on children under 13.
Fast-Track SWIFT
Finally, Marcus addressed the NAD’s Fast-Track SWIFT cases, which NAD launched under former head Laura Brett in 2020 with the goal of completing reviews of certain digital ad claims within 20 business days, significantly faster than the Standard Track for dispute resolution within the BBB self-regulatory forum.
At the time NAD introduced SWIFT, it projected that around five cases a year would be fast-tracked. However, last year NAD tackled 30 SWIFT cases, representing about 23% of NAD’s case load, according to Marcus.
“Certainly, we want to build on the very long standing and mature successes of the National Advertising Division,” she said. “The Fast Track SWIFT newish track has taken off and has really been attractive to the challengers in the space and so, I’m very pleased to see that we were responsive to a need.”
