As More Political Advertising Moves Online, State Laws Provide the Regulatory Framework for Disclosures and Recordkeeping

In a recent state court decision, a King County judge in Washington State concluded that Facebook violated state political disclosure rules by not publicly providing information about the sale of political ads relating to state elections and ballot issues, as required by state law.  While there does not yet appear to be a written decision in the case, according to trade press the judge’s ruling rejected motions by Facebook parent Meta to have the law declared unconstitutional and to have penalties asserted by the State attorney general thrown out (see attorney general’s statement here).  We have written much on this blog about FCC regulations relating to political advertising and have noted how those rules do not apply to online platforms.  This case is but one example of how state laws are filling in some of the gaps in the regulation of political advertising.

As we wrote several years ago, the Federal Election Commission has only general rules requiring that paid online political advertising for federal offices have some identification of the sponsors of the advertising.  The FEC in 2018 started a rulemaking proceeding to determine if the “stand by your ad” certifications required in most federal broadcast and cable candidate advertising (the requirement which obligates the federal candidate to say “I’m X and I approved this message”) should carry over into the online world.  That proceeding has never been resolved – likely held up both because of the difficulty of resolving sensitive political issues at the FEC, and because of the inherent difficulty of adopting one-size-fits-all disclosure obligations for online media, where ads can range from TV-style videos to short tweets and textual messages to images displayed in virtual reality worlds.  Carrying over broadcast-style regulation to these diverse platforms is a tricky fit.

But many states have jumped into the fray, with Washington State having the most robust and detailed disclosure and recordkeeping rules. These rules require platforms running state and local political ads to retain information about the ads, for longer periods of time than what is required for broadcast and cable entities under FCC rules.  Without going into every aspect of the Washington State rules, the obligations include the requirement for all platforms that distribute state and local political messages (including broadcasters, print, billboards and online companies) to make information about the buyers of political advertising available to the public on demand, and to keep those records for 5 years from the date of the election. (FCC rules, in contrast, require that public file documents be maintained only for two years from the date that the document was created).  Washington State also requires the public disclosure of a copies of each ad and a description of any other work provided by the seller of the advertising (e.g., did they film or edit the ad, did they help write the copy, did they distribute it to other media outlets, etc.) — obligations not imposed by FCC rules.  The name and address of the sponsor, and the name of the candidate or the issue addressed, also must be disclosed, along with the price paid by the ad sponsor and when and how it was paid (e.g., cash, check, wire, trade, etc.), and the dates that the ads were presented to the public.  FCC rules require broadcasters and cable entities to disclose the sponsor, the price paid (but not how the payment was made), and the ad schedule for all candidate ads and for ads on federal issues (see our articles here and here on federal issue advertising disclosure obligations).

Washington State also requires additional disclosures by online companies. The rules require a description of the demographics targeted by the political ads, and the total number of impressions generated by these ads.

While Washington State might currently has the most detailed rules for political disclosure, it is not the only state that has rules that govern political advertising beyond the broadcast world, including online advertising.  California, for example, has extensive disclosure obligations for paid social media advertising, but it regulates online video political advertising that resemble television ads with rules that are similar to TV ad rules — just requiring a sponsorship identification disclosure in the ad.  In our article about the FEC rules, we wrote about New York State’s laws that require disclosure of information about political advertising sponsors – but in most cases that disclosure is to a state commission, and media selling the advertising need only verify that the advertiser has registered.  Issue advertisers in Massachusetts have similar obligations to make disclosures to a state commission, and to provide the URL in their ads for the state database of information about political ad sponsors.  Other states, including Nevada and New Jersey, have rules requiring that the media outlet make disclosures about certain political advertising information to the public on request.  Other states have recordkeeping or public disclosure obligations for media companies in more limited circumstances.

Sponsorship identification is also an area in which states have become active.  We have written from time to time about federal efforts to impose obligations on political advertisers to disclose who is funding those ads, either through regulatory complaints (see for instance our article here) or through legislation (see our articles here and here), but for the most part these efforts have not been successful.  In many states, issue advertisers do have to disclose not only the ad sponsor, but also the two or three largest contributors to the sponsor, in some cases requiring the disclosure of who contributed to those contributors, when the ad sponsor is a company and not an individual.

This complex web of conflicting state obligations imposes real difficulties on national media platforms, particularly online platforms which can be accessed across the country and can have advertising placed on those platforms to target an audience in various states.  We wrote about our concerns with programmatic ad platforms and the ability to police many legal issues – including these political obligations.  While some online platforms have developed systems to gather this information, these systems are only as good as the information provided by those using the systems.  Where users of a programmatic system don’t provide the required information, the data that the platform has may not meet the requirements under these various and complex state laws.

Facebook raised these concerns about the difficulty of complying with myriad regulatory structures in their motion for summary judgment in the Washington State proceeding.  Facebook also pointed to the Fourth Circuit Court of Appeals’ decision from 2019 throwing out Maryland’s political disclosure rules, which were similar in scope to those in Washington.  The Fourth Circuit’s decision, about which we wrote here, rejected as unconstitutional Maryland’s requirements that media outlets reveal this information about their ad buyers, concluding that the requirements violated the media companies’ First Amendment rights, when a less restrictive means of informing the public about the identity of political speakers was available by requiring the political actors to themselves reveal the information (perhaps like the requirements under New York and Massachusetts laws).  Facebook’s arguments have been rejected by the Washington State court, at least for now, and a trial is scheduled to begin on November 14, 2022.

With these detailed and conflicting obligations imposed on media companies and political advertisers by the various states, the difficulty of compliance is obvious.  We will be watching as challenges to these rules play out, particularly if there are enforcement actions against media companies brought in other states under their state laws.  In the interim, we are monitoring these rules to help our clients keep abreast of their obligations, and all media companies providing political advertising services should be monitoring these developments closely.

Courtesy Broadcast Law Blog