The metaverse is an immersive, virtual, global, always-on space where people, including children and teens, go to socialize, learn, create, shop, game and share. And it is not going anywhere. Built through the highly sophisticated use of AI, machine learning and other emerging technologies, the metaverse is also still largely unfamiliar.
Any new environment that does not yet have its own set of dedicated regulations and guidelines can spur creativity, innovation and enhanced experience, but it also can pose risks to visitors, especially vulnerable audiences like children and teens. So it is imperative that brands do their due diligence when reviewing their own products for compliance with advertising and privacy laws. But if there are no guidelines for this innovative new environment, what laws apply to the metaverse?
The short answer is relatively simple: all of them. Just because a platform or digital environment is new does not mean that existing laws and regulations do not apply to it. But often it is the application of that guidance to the new environment that can pose the greatest challenge. For instance, do the Federal Trade Commission’s (FTC) rules around endorsers and influencers apply to avatars and computer-generated influencers in the metaverse? What are the ways to apply appropriate disclosures to advertising in the metaverse, and what happens if the platform I am building on does not yet have sophisticated ways for me to apply them? In addition, how will the risks and harms recently proliferating on social media—such as bullying, body image issues, harassment, revealing too much personal information, making unintended purchases or exposure to violence—show up in the metaverse?
Meta, a company dedicating everything—including its name—to the metaverse, is demonstrating that navigating this unregulated space is challenging, especially in certain demographics like children and teens.
As I have talked about in the past, when your advertising or marketing is directed at children under the age of 13, things can be even more complicated. According to the Advertising Guidelines developed by our organization’s Children’s Advertising Review Unit (CARU), „Children have limited knowledge, experience, sophistication, and maturity. Advertisers should recognize that younger children have a limited capacity to evaluate the credibility of information, may not understand the persuasive intent of advertising, and may not even understand that they are viewing or hearing advertising.“
Brands should not be confused: Advertising and privacy law and self-regulatory guidelines, including CARU’s privacy guidelines and the Children’s Online Privacy Protection Rule(COPPA), apply to the metaverse just as they would any other platform. Beyond self-regulatory guidance, FTC regulations and guidance about truthful and transparent advertising apply in the metaverse as well. For instance, Section 5 of the FTC Act does not tolerate advertisers being deceptive or unfair when it comes to affecting commerce. CARU’s Advertising Guidelines build upon that guidance by enumerating special responsibilities advertisers have regarding children, including areas such as clear and conspicuous disclosures, blurring of advertising and non-advertising content, in-app and in-game advertising and purchases, and endorsers and influencers.
In addition, areas of federal and state law relating to privacy, intellectual property and consumer protection must be considered. And for companies operating globally, policy and legal nuances may apply in some countries or regions such as the United Kingdom and the European Union. Even more complex are the rules in “BRICS” nations (Brazil, Russia, India, China and South Africa).
Here are some basic principles any brand in the children’s space should follow no matter the platform:
• Be transparent. All advertising should be easily recognizable as advertising. For example, you can use clear and conspicuous disclosures that notify children that they are interacting with an ad.
• Understand when content becomes advertising and also what is not advertising. When a product or brand is presented in an experience with the intent to promote or encourage the purchase of a product, it is an ad. The mere presence of a brand or product does not make content advertising if the intent of the content is entertainment or education and not sales.
• Protect children’s privacy. Get to know COPPA. From their names to their schools and hometowns, children do not understand the risks associated with sharing personal information. COPPA makes it illegal for children to provide certain personally identifiable information without prior consent from a parent or guardian.
• Understand the privacy policy of each platform you are on.
• Be aware of relevant state-level and international privacy regulations.
As a new frontier, the metaverse is full of opportunities for brands and also creates a lot of nuanced challenges for companies engaging with or marketing to children and teens. I encourage responsible brands—large and small—to take proactive steps to better understand the advertising and privacy challenges in the metaverse and to embrace and adopt these best practices to ensure responsible and positive engagement with children.
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