Privacy organizations file FTC complaint against PepsiCo

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Four consumer and privacy organizations filed a joint complaint with the Federal Trade Commission (FTC) on Oct. 19 alleging that PepsiCo and subsidiary Frito-Lay North America engaged in deceptive and unfair digital marketing practices.

The complaint, filed by the Center for Digital Democracy (CDD), Consumer Action, Consumer Watchdog and The Praxis Project, argues that several Frito-Lay marketing campaigns violated Section 5 of the FTC Act by disguising marketing and data collection tactics aimed at teens.   

“Food and beverage companies targeting teens online have not adopted age-appropriate safeguards,” said Jeff Chester, executive director of the CDD. “Pepsi needed to recognize that it simply can't do its advertising as usual when it comes to targeting teens online.”

The three campaigns mentioned in the complaint are online interactive games “Hotel 626” and “Asylum 626,” and online concert “Doritos Late Night,” featuring singer Rihanna.  

The “Hotel 626” campaign is cited in the complaint as using a variety of under-the-radar techniques to entice teenagers to “check in” to the online hotel, and post and share photos of themselves. The campaign allegedly required consumers to use webcams, microphones and mobile phones to participate in the experience.

Asylum 626” was designed to maximize access to teens' personal information, the complaint alleges. Users who want to play the game are encouraged to give the site access to their Facebook and Twitter accounts with the promise that the more information they provide, the “scarier” the experience will be.
The “Doritos Late Night” online concert promotion collected personal data without adequately disclosing the extent or purpose of that data collection and did not make clear that the experience was meant for advertising purposes, according to the complaint.

Laura Moy, graduate teaching fellow in first amendment and media law at the Institute for Public Representation at Georgetown University Law Center, and a contributor to the complaint, said the Frito-Lay campaigns violated Section 5 of the FTC act because the law prohibits "unfair or deceptive acts or practices in or affecting commerce."

For each campaign, Chester said Pepsi should have “created an appropriate online environment that enables teens to control their data and made clear that these are ads, not games or virtual worlds." 

“Pepsi needed to have developed these campaigns with full transparency and disclosure,” he said. “They should have designed meaningful safeguards to protect teens from the unintended consequences of digital ads.”

Chester said self-regulatory agencies such as the Direct Marketing Association (DMA) and the Digital Advertising Alliance (DAA) have done “nothing to protect teens online, especially not their privacy.”

Senny Boone, SVP of corporate and social responsibility at the DMA, emailed the following statement in response to Chester's comment: “DMA's Guidelines for Ethical Business Practice – as well as the Digital Advertising Alliance's Self-Regulatory Principles for Online Behavioral Advertising – provide protections for teens, as well as adults and children, in the online environment. Specific to the complaint, DMA will conduct a comprehensive examination and respond appropriately.” 

Pepsi and the DAA were not immediately available for comment.

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