CARU Releases "Metaverse Guardrails" Outlining Best Practices for Advertising to Children in the Metaverse

This week, the Children’s Advertising Review Unit (CARU) released its “Metaverse Guardrails” which it says are “intended to be a set of realistic, actionable considerations and best practices” for advertising to children within the metaverse.

The Guardrails follow CARU’s issuance of a compliance warning back in August 2022 (that addressed the applicability of the existing CARU Advertising Guidelines to the metaverse, reminding brands that those Guidelines also apply to advertising in the metaverse and emphasizing certain core CARU principles) and CARU’s development of a Metaverse Working Group.

Here are some key takeaways from the new Metaverse Guardrails:

• Because children may be a more vulnerable audience, advertisers have special responsibilities to children. Advertisers should ensure they have a thorough understanding of the advertising and privacy regulatory landscape to assess how to apply their obligations to the metaverse environment.
• Advertising should be transparent and easily recognizable as advertising. Advertisers should not present advertising that “blurs the distinction between advertising and non-advertising content” and should clearly and conspicuously disclose when something Is advertising. In this context, that means using language children will understand and using design techniques to distinguish ads from non-advertising content.
• Advertisers should understand when content becomes advertising, which the Guardrails say considers factors such as whether (i) the appearance of product/brand intended to promote/encourage purchase of a product; (ii) the endorsement of a specific product/brand; (iii) a featured product is tied to a promotion/event; (iv) there is a call-to-action or sales message; (v) users are directed to a purchase experience; and (vi) other factors such as if the content is sponsored, if there is brand licensing, the creative promotes demand for a product, the creative explains a retailer’s offerings or references a specific product, and a company’s economic/commercial motivation.
• Ensure advertising is safe and appropriate for children by not advertising products that are illegal or pose a risk to their mental/physical health/safety, and by not engaging in advertising that could frighten, provoke anxiety, portray inappropriate behavior, put undue social/emotional pressure on children, or that is otherwise inappropriate for children. Avoid manipulative tactics.
• If the purchase of virtual goods costs real money (including real money required to buy in-game currency), make clear that the purchase costs real money.
• Use clear and conspicuous disclosures to indicate when something is advertising. The Guardrails specifically highlight that disclosures are required in certain situations, including:
  • “Advergames” (“when a game or experience is created specifically to advertise products”)
  • Where the use of a licensed character/IP is used in a third-party world and there is either a call-to-action or the “purpose of featuring the IP in the experience is to a) increase traffic to a web service/app; b) induce a purchase; or c) promote a product"
  • If branded products are present in an experience and the purpose of the experience is to promote a brand/service, or drive traffic to a brand’s online website/app
  • If a company-owned/operated non-playable character (NPC) is intended to be an advertisement in a third-party experience (in which case the disclosure is required at the initial point of interaction with a player)
  • For retail experiences, (i) where products are shown that are available for purchase in the brand’s physical store/online, or (ii) if the product isn’t available for sale offline, and the purpose of the experience is to either a) promote a product; b) induce a purchase either within the experience of offline; or c) drive traffic to the an online website/app
  • On social media when the content is produced in connection with a brand partnership
  • For virtual merchandise, if the item is available for sale, virtually or offline
  • For endorsers/influencers, when there is a material connection (pursuant to the FTC Endorsement Guides)

In determining whether a disclosure would be considered “clear” to a child the Guardrails lay out some things to consider, including the use of easy-to-understand language, prominently placed visuals, audio disclosures, easily legible and visible fonts and colors, persistent and obvious disclosures, and layering disclosures throughout experiences. Each experience should be considered in determining what sorts of disclosures will be most effective.

• Get to know COPPA, which governs the online collection and use of data for children under 13 and “applies to websites, online games, and metaverse platforms that are directed to children or have actual knowledge they are collecting personal information from children under 13.” The Guardrails emphasize the factors the FTC considers in determining whether a site is child-directed and reiterates that if a website or online service is directed to children, including those in the metaverse, it must provide COPPA protections (including those related to screening, collection of persona information, parental consent, etc.).
• In addition to COPPA, adhere to CARU’s Privacy Guidelines, which outline principles to “assist companies and brands in developing their metaverse presence while respecting children’s privacy” and require things like (i) in collecting personal information from U13, obtain verifiable parent consent and disclose data collection practices, information uses, and means for collecting; (ii) disclose how/why the information is collected and how it is handled; (iii) continuously assess data retention policies/data they collect.
• Consider best privacy practices for U13 experiences, including the functionality of chat features, whether there are automated safeguards in place, the selection of usernames, access to parental controls, time limits, parent-established passwords for purchases, default settings, ease of blocking/reporting functions, and the consideration of global standards/laws.

The Guardrails also encourage brands to consider use of the BBB National Programs’ “TeenAge Privacy Program” (TAPP) Roadmap which provides a “new operational framework designed to help companies develop digital products and services that consider and respond to the heightened potential of risks and harms to teenage consumers and to ensure that businesses collect and manage teen data responsibly.”