FTC Regulations on Food Marketing to Children: A Complicated and Tense History

Part II of a series of posts by Nadia Arid, a  former Harvard Law School student in the Food Law Lab:

With technology increasing children’s exposure to advertisements and companies finding increasingly innovative ways to target this population, the health effects of food marketing on children will continue to compound as time passes. Part I of this series discussed the emerging data demonstrating that food marketing has negative health effects on children and has been a primarily driver of the childhood obesity epidemic in US. This section will provide context for why the Federal Trade Commission, the relevant regulatory body, has steered clear of attempts to regulate food marketing to children in recent years, despite the growing evidence that regulation may be warranted.

The FTC’s Authority to Regulate Food Marketing to Children

As Part I of this series outlined, food marketing to children may create some commercial value for food and beverage companies, but it comes at a great cost for the health of children in the US, particularly those from marginalized communities. With this apparent cost-benefit imbalance and the social justice implication at play as well, regulation in this arena might seem obvious. But instead the food and beverage industry has remained unregulated in recent years when it comes to marketing targeted at children. The Federal Trade Commission would serve as the best conduit for regulations against food marketing aimed at children. Section 5 of the FTC Act vests the FTC with authority to regulate food marketing and prohibits unfair and deceptive practices in commerce. The Commission “will find deception if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.” Legally, the FTC continues to have some authority to provide rule-making with regards to marketing strategies that target children.

However, the strongest barriers to regulation in this area may not be legal ones but rather political forces that have discouraged the FTC from acting against the food and beverage industry. To fully understand the FTC’s reluctance to get involved, we have to take a look at the history of the FTC with regards to food marketing targeted at children—we have to uncover the story of an agency that tried to do the right thing and was vehemently rebuked and publicly shamed.

Failed Attempts to Regulate Marketing to Children

As early as 1978, the Federal Trade Commission had recognized the harmful effects of food marketing on children. Even before the emergence of compelling data demonstrating a connection between marketing strategies and health problems, like childhood obesity and diabetes, the FTC had prioritized the issue. In 1978, the Commission determined that “television advertising for any product directed to children who are too young to appreciate the selling purpose of, or otherwise comprehend or evaluate, the advertising is inherently unfair and deceptive.” The agency focused on the fact that children were too young to distinguish between fact and fiction and that advertising would have a particularly deleterious effect on the development of their eating habits. In fact, the Commission went as far as to suggest that a ban on food marketing could be the best way to “cure this inherent unfairness and deceptiveness.”

In connection with this intent to regulate the food and beverage industry’s marketing practices, the FTC commenced a public hearing. The response was swift and overwhelming. Ad agencies and food and toy manufacturers worked tirelessly to block the proceedings and created campaigns to generate disapproval of the proposed regulations. The food and beverage industry’s strong influence on public opinion manifested itself during this period. Media outlets at the time got involved and criticized the proposal as overly broad and paternalistic. The Washington Post published a well-known article calling the proposed regulation “a preposterous intervention that would turn the FTC into a great national nanny.” The FTC’s reputation was slowly torn away before the general public, and the agency’s judgment was called into question.

Not only did the food and beverage industry fight back against the FTC, but they used their collective power to pull in another powerful actor to aid their efforts: Congress. Following the public hearing commenced by the FTC on a potential ban of food marketing to children, industry giants lobbied Congress to prevent the FTC from regulating food marketing practices. In 1980, the power of the industry won out. Congress passed the Federal Trade Commission Improvement Act, removing the FTC’s rulemaking power with regard to addressing “unfair” advertising towards children. Though the FTC is still authorized to provide rule-making under its deceptive jurisdiction, losing the ability to regulate unfair practices aimed at children was a strong blow to the FTC’s regulatory authority.

Restoring the FTC’s Power and Influence

This failed attempt by the FTC has had lingering effects on the Commission’s power and its willingness to take on the issue of food marketing to children. According to the FTC’s own report, “[t]he children’s advertising proceeding was toxic to the Commission as an institution,” and the “agency was literally shut down for a brief time” as a result. That same report concluded that the agency should not ban certain kinds of stating that “[t]he Federal Trade Commission has traveled down this road before” and “[i]t is not a journey that anyone at the Commission cares to repeat.” This palpable discomfort with repeating the events of 1978 has had a strong impact. Since that year, the FTC has only regulated advertising aimed at children on a case-by-case basis and has shifted away from enforcement against food marketing practices towards the encouragement of voluntary standards.

But those voluntary standards have done little to change the landscape of advertisements aimed at children. A recent study by the Federal Trade Commission found that fast food companies have dramatically increased spending on television and new media advertisements targeted at children ages 2 to 11. Furthermore, while some fast food restaurants made slight improvements to the nutritional qualify of their kids’ meals, the number of television ads directed at children for higher calorie menu items more than doubled from 2006 to 2009. In light of the inadequacies of the current self-regulatory scheme, public health experts have called on federal policymakers to intervene and provide enforceable regulations to reduce children’s exposure to television marketing of unhealthy foods. The FTC’s involvement in this area is still necessary.

Why Congressional Intervention is Necessary to Spark FTC Action

Given the FTC’s history with attempted regulations of food marketing to children, the Commission will need to be convinced that any future attempts to get involved in this are will be supported more widely than they were in 1978. Political capital clearly matters to the FTC, and ensuring that the imposition of regulations will not sacrifice this political capital is crucial in removing barriers to action for the FTC.

Congress can play an important role in emboldening the FTC to act. Receiving these directives from Congress can help reduce the reputational cost that the FTC risks by taking on an industry on its own. Congress can direct the FTC to regulate via rulemaking under the Administrative Procedures Act (APA). Congress could also restore the FTC’s ability to make rules in this area under an authority to regulate unfair marketing practices. Currently, the Commission still has the authority to regulate under its deceptive practices jurisdiction but expanding this jurisdiction to its original pre-1980 scope would provide the Commission another mechanism through which it can regulate marketing targeted at children.

A More Favorable Climate for Regulation

Given the relatively recent data on the connection between food marketing to children and the increase of childhood obesity in the US, there is now more support for increased regulations on food marketing to children. Furthermore, the definitional challenges that existed in 1978 have largely been resolved over time, and it is now more feasible to “tailor regulations on the basis of the target audience and possibly also the nature of the product advertised.” These standards already exist and have been defined by the industry. For example, the Alliance for a Healthier Generation has created standards for what constitutes “nutritional, lower calorie” snacks. Also, the Institute of Medicine has created a way of classifying the healthfulness of foods and beverages, for the purpose of guiding policy on the sale of “competitive foods,” or foods sold outside of the national school lunch program, in schools.

A lingering challenge will be to regulate the advertisements that reach children without unnecessarily restricting advertisements for adults. This issue can be resolved by starting with a smaller subset of regulations, i.e. only for children’s TV shows or for TV stations aimed for children, and then expanding if more regulation coverage becomes necessary. Focusing on the audience of a specific advertisement rather than on the product itself is a good way of ensuring that a proposed regulation does not unduly restrict access to commerce for adults.

Exploring New Proposals for Action

Instead of taking an entirely hands-off approach out of fear of backlash from the food and beverage industry and the media, the FTC should push for a more moderate proposal. The Public Health Law Center has outlined a few of these potential options: “limiting the tying of toy giveaways with unhealthy kids’ meals in restaurants; using licensing laws or other mechanisms to motivate retailers to create healthy checkout lanes and similar point-of-sale product placement strategies; pricing strategies, such as raising taxes on sugary drinks to make them more costly for youth to buy; and creating media messages to promote consumer awareness about fitness and sound nutrition.”

Part III of this series will delve deeper into one proposed regulation that could limit children’s exposure to dangerous advertisements and will include a legal analysis of the proposal to demonstrate that regulations on food marketing to children can be legally and politically palpable and may be necessary for the health promotion of children in the US.

 

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