Hunton Retail Law Resource

The Children’s Advertising Review Unit (CARU) of BBB National Programs announced an investigation into the popular kids YouTube channel “Vlad and Niki,” owned by Content Media Group FZC, LLC (CMG), which produces videos under various licensing and merchandising agreements. Because these agreements obligate CMG to produce the videos and allow CMG to share in generated revenue, CARU considers CMG an endorser of the products in Vlad and Niki videos and subject to CARU’s Self-Regulatory Guidelines for Children’s Advertising.

CARU found that CMG violated the guidelines by:

1. Failing to require that its endorsers and influencers clearly and conspicuously disclose their material connections (financial or otherwise) to brands or advertisers whose products or services they endorse or otherwise feature in their videos, where such material connections exist;
2. Failing to adequately disclose where a material connection exists between the Vlad and Niki Channel and the advertisers of any products reviewed or featured in the Channel, the existence of these material connections, and that such videos containing these material connections are advertisements; and
3. Failing to clearly and conspicuously identify advertising in its videos as ads in language and audio that children can easily see, hear and understand.

CARU recommended that CMG come into compliance by:

1. Ensuring that advertisements are clearly and conspicuously identified as ads in language that children can easily understand;
2. Ensuring that if an advertisement is integrated into the content of a video, making clear that the video contains advertising in a manner that will easily be understood by the intended audience;
3. Ensuring CMG clearly and conspicuously discloses where it has a material connection to the advertiser (i.e., a connection that is not expected by ordinary children);
4. Where a video featuring Vlad and Niki playing with various toys (including their own branded toys) is produced under licensing and merchandising agreements that obligate CMG to produce the videos promoting the branded toys, CMG should clearly and conspicuously disclose this material connection, identify the selling intent of the video, and disclose that CMG shares in the revenue generated by the sales of the branded toys; and
5. Not relying solely on a platform’s disclosure mechanism as the only means of disclosing material connections, or that the message contains advertising, since platform tools may be insufficient to be considered a clear and conspicuous disclosure to children.

CMG acknowledged CARU’s recommendations and agreed to “work diligently to comply” with the guidelines.

In general, retailers should keep the following in mind when publishing advertising content aimed at children:

• Sponsored Videos: Retailers should include clear and conspicuous disclosures at the beginning, middle, and end of videos by including language, in both text and audio in the video itself, to disclose the material connection to the video’s sponsor. CARU considers language such as “sponsored by” or “paid promotion” to be less clear to children.
• Product Promotion Videos: Retailers should include advertisement disclosures that are clear and understandable to a child.
• Independent Content: Retailers should request that their production companies disclose content that features products from existing brand partners.