Public hearing on internet disclaimers

On June 27-28, 2018, the Commission held a public hearing on its Notice of Proposed Rulemaking (NPRM) on internet communication disclaimers and the definition of “public communication.” The Commission received over 165,800 written comments on the NPRM and 18 witnesses testified at the hearing.

Background

On March 26, 2018, the Commission published an NPRM seeking comment on proposed revisions to the disclaimer regulations as applied to public communications over the internet. (83 Fed. Reg. 12864)

Under the Federal Election Campaign Act (the Act) and Commission regulations, a disclaimer is a statement that must appear on certain communications in order to identify who paid for the communication and, where applicable, whether the communication was authorized by a candidate. Disclaimers "must be presented in a clear and conspicuous manner, to give the reader, observer, or listener adequate notice of the identity" of the communication’s sponsor.

With some exceptions, the Act and Commission regulations require disclaimers on electioneering communications by any person; political committees’ websites, public communications and bulk emails; and public communications by any person that expressly advocate the election or defeat of a clearly identified federal candidate or that solicit contributions. The term "public communication" does not include internet communications unless the communication is placed for a fee on another person’s website.

The Commission’s NPRM sought comment on a proposed revision to the definition of “public communication” and two alternative proposals to revise its disclaimer regulations to address paid video, audio, text and graphic advertisements that are distributed over the internet.

The Commission proposed to revise the current definition of “public communication” to include communications placed for a fee on another person’s “internet-enabled device or application” in addition to those placed for a fee on another person’s website.

Alternative proposals A and B proposed to amend the disclaimer rules to clarify the disclaimers required for different forms of internet public communications and to identify when these communications may employ a modified approach to the disclaimer requirements. Specifically, the Commission proposed:

• In Alternative A, to apply or adapt the specific disclaimer requirements that now apply to radio, television, and print communications to internet public communications; in Alternative B, to not apply the “stand by your ad” or other specific disclaimer requirements to internet ads.
  
• In both Alternatives A and B, to allow an “adapted disclaimer,” or abbreviated disclaimer on the face of the communication in conjunction with an indicator that further information is available and a technological mechanism that leads to a full disclaimer (“one step” from the original communication), rather than providing a full disclaimer on the face of the communication itself.
  
• In Alternative A, to apply the “adapted disclaimer” rule only to small text or graphic public communications distributed over the internet; in Alternative B, to apply the “adapted disclaimer” rule to also include audio and video internet public communications.
  
• In Alternative A, to allow an “adapted disclaimer” when a full disclaimer cannot fit on the face of a text or graphic internet communication due to technological constraints; in Alternative B, to allow an “adapted disclaimer” when a full disclaimer would occupy more than a certain percentage (10%) of any internet public communication’s available time or space.
  
• In Alternative A, to require the payor’s name on the face of a communication using an “adapted disclaimer"; in Alternative B, to allow a payor to use an abbreviation or acronym instead of its name or, in some circumstances, to not note the payor’s identity at all on the face of a communication using an “adapted disclaimer.”
  
• In Alternative B, to add an exception to the disclaimer requirements for an internet public communication that can provide neither a disclaimer in the communication itself nor an adapted disclaimer (replacing the existing exceptions for internet public communications).
  

Hearing

The 18 witnesses who testified at the public hearing represented a range of interests, including political party committees, advertising vendors, academic researchers, industry associations, consumer groups, and other charitable and social welfare organizations. Most witnesses supported the Commission’s adoption of revised rules to address disclaimers on internet ads, though witnesses differed in their support for Alternative A or B or for a modified approach drawing from aspects of one or both alternatives.

A few witnesses on panels on the first day of the hearing testified against additional regulations to address disclaimers on internet ads, including the first witness, Allen Dickerson, Legal Director of the Institute for Free Speech. Mr. Dickerson stated that the rulemaking was outside of the FEC’s authority. He noted that although the Supreme Court affirmed the disclosure and disclaimer regulations in Citizens United v. FEC, that case did not address video ads on the internet. He also testified that disclaimers hinder a speaker’s message and may result in a ban on speech. Ilya Shapiro, Senior Fellow in Constitutional Studies at the Cato Institute also focused his argument on First Amendment arguments against requiring disclaimers. According to Mr. Shapiro, disclosure requirements cause anxiety for speakers, and provide little value to voters. Using an analogy of medical disclaimers on television ads, he testified that more extensive disclaimers make them less likely to be read.

Dan Backer, Counsel for the Coolidge-Reagan Foundation, also emphasized that individuals will be burdened and speech hindered by additional disclaimers. He testified that the proposed regulations would exacerbate the divide between rich (who can hire lawyers to defend their First Amendment rights) and poor speakers. Mr. Backer proposed an expenditure threshold for disclaimers on certain internet communications. Victor E. Bernson, Jr., Vice President and General Counsel of Americans for Prosperity, said the Commission’s proposals would burden a speaker’s First Amendment rights. He asserted that the additional disclaimer requirements would primarily affect activists. Mr. Bernson testified that he favors a “less is more” approach and recommended a hybrid of the Commission’s proposals.

Other witnesses on those hearing panels testified to the value of disclaimers and supported revising the regulations to address internet ads. Brendan Fischer, Director of Federal Reform at the Campaign Legal Center, noted that disclaimers, historically, are a “key” to finding further disclosure information and can “allow enforcers to uncover foreign actors.” He testified that it was important for disclaimers to be on the face of advertisements to educate the electorate, that any exceptions to a full disclaimer must be narrow and objective, and that, for modified approaches to reach a disclaimer within one step, “one step must be only one step.” Paul S. Ryan, Vice President of Policy & Litigation at Common Cause, noted that Citizens United upheld the disclaimer regime under the Act for short, 10-second ads and did not foreclose regulation of video ads on internet. He favors requiring “stand by your ad” statements for internet video communications and said that the Commission should follow Citizens United’s guideline of a 4 second statement for a 10 second video. Craig Holman, Ph.D., Government Affairs Lobbyist at Public Citizen, testified that the lack of disclosure has allowed foreign intervention in U.S. elections. He prefers that all internet ads have disclaimers and encourages the Commission to act quickly to revise the regulations. He also encourages the Commission to require social media platforms to provide a library of political ads that includes sponsors and target audiences along the lines of what’s provided for in the FCC’s Communications Act.

Ian Vandewalker, Senior Counsel of Democracy Program at the Brennan Center for Justice, testified that disclaimer rules “should be robust, have broad application to the many ways of spending on the internet, and be vigorously enforced.” Mr. Vandewalker suggested that the Commission follow three principles in revising its disclaimer regulations: the Commission should not apply exceptions to online ads since technological innovations are better able to accommodate these disclaimers; a production cost metric should trigger disclaimer requirements; and disclaimers should “be portable,” that is, disclaimers should be on the face of the ads in order to “follow” political messages in case the messages are shared.

Other witnesses testified to empirical data about political ads online and their practical experiences in placing such ads as purchasers or vendors. Dr. Young Mie Kim, Professor at the University of Wisconsin’s School of Journalism and Mass Communication, testified that both of the NPRM alternative proposals “diverge from the normative guiding principles on disclaimers.” Dr. Kim also provided research to suggest that the Commission’s proposals fail to fully address the strategic use of digital advertising with malicious intent, such as foreign actors’ interference with the elections. Finally, she noted that the details of the Commission’s adaptive disclaimer rules, such as the 10 percent adaptive disclaimer threshold, appear to be arbitrary and lack empirical evidence to support the guidelines. Dr. Kim emphasized that the rules must help voters make decisions without overburdening learning, and must also assist in monitoring election activities.

Witnesses from three Republican national party committees also testified at the hearing about disclaimers in the context of their experience purchasing online ads. Doug Hochberg, Chief Digital Officer at the RNC agreed that the public should know who is paying for political ads, however he noted that the disclaimer rules should be “tech agnostic” and adaptable to new technology. He also distinguished between online ads (that are interactive) and television ads, and advocated that the Commission should not put them in the same category under the rules. Mr. Hochberg does not favor one style of adaptive disclaimer indicator but encourages the Commission to let the market decide. Theodore Peterson, Digital Director of the NRCC, and Thomas Reiker, Deputy Digital Director of the NRSC, issued a joint statement. They encouraged the Commission to consider the practical concerns of additional disclaimer requirements and urged that the overriding consideration should be flexibility in regard to new technologies.

Chris Nolan, Founder and Chief Executive Officer of Spot-On, a cloud-based ad buying service, also testified at the hearing as a vendor placing political ads online. Ms. Nolan encouraged the Commission not to focus only on disclosures but also to consider the behavior of advertisers. She felt that additional disclaimer requirements may cause vendors to reject political ad buyers. Ms. Nolan encouraged the Commission to adopt the adaptive disclaimer indicator and pointed to California’s political ad badge as a model.

The Commission also heard testimony from Carmen Scurato, Vice President of Policy & General Counsel at the National Hispanic Media Coalition. (Ms. Scurato also appeared on behalf of Asian Americans Advancing Justice and Color of Change.) Ms. Scurato testified that minority populations rely on smart phone technologies more than other ethnic groups and that inadequate disclosures and lack of disclaimers result in disenfranchisement of these groups. Therefore, she testified that disclosure requirements are critical to combat voter suppression tactics used against minority populations. Ms. Scurato encouraged flexibility in disclaimers that could be read on mobile devices and emphasized that any adaptive disclaimer indicators must be clear. She encouraged the Commission to adopt a “paid political ad” indicator and to revise the definition of “public communication” to include those “placed or promoted for a fee” to capture content created by others but promoted by online influencers. She also encouraged the Commission to apply the regulations to ads on other internet platforms and services such as Netflix.

Several witnesses testified as representatives of consumer- or industry-facing technology groups. Christine Bannan, Administrative Law and Policy Fellow at the Electronic Privacy Information Center testified on the impact of the disclaimer regulations on the public. She said that voters are microtargeted by online advertisers. As a result, she asserted that voters have a right to know why they’re targeted and who is paying for the ads that target them. She testified that disclaimers for internet communications should be at least the same as those applied to traditional media. She also testified that a click through adaptive disclaimer would undercut the disclaimer regime since user click through rates are less than one percent. Ms. Bannan supports a “paid for” disclaimer plus an indicator that leads to a full disclaimer.

Dave Grimaldi, Executive Vice President of Public Policy at the Interactive Advertising Bureau proposed that the Commission adopt the Digital Advertising Alliance’s (DAA) “AdChoices” signifier that is required on certain internet advertisements. Mr. Grimaldi testified that his industry’s signifier requirements are a “technologically resilient” disclosure regime that the industry could partner with the FEC to enforce.

Joseph Jerome, Policy Counsel at the Center for Democracy & Technology, criticized the DAA’s “AdChoices” model and cited a study that “only 26% of internet users recognized the AdChoices icon and only 9% of those users understood what it meant.” Mr. Jerome encouraged the Commission to be mindful of the potential design issue of a disclaimer indicator and encouraged the Commission to prioritize machine-readability for disclaimers.

Finally, Berin Szóka, President of TechFreedom, encouraged the Commission to focus on usability by creating a rule that considers the nature of the ad. He favors including “political ad” as the signifier or allowing hover text with the disclaimer. Mr. Szoka encouraged the Commission to have a trial period through the 2020 elections to allow the advertising industry to refine its implementation of the disclaimer rules and build awareness within the electorate. The Commission agreed to keep its record open for additional comments from the witnesses until mid-July.

Citations

Statute

52 U.S.C. § 30120(a)
Identification of funding and authorizing sources

Regulations

11 CFR 100.26
Definition of public communication 

11 CFR 110.11
Communications; advertising; disclaimers 

Resources

• Hearing page
  
• Notice of Proposed Rulemaking: Federal Register notice (March 26, 2018) [PDF] 
  
• NPRM proposals applied to sample internet ads (May 18, 2018) [PDF] 
  
• Public comments on the NPRM