Why Independent Industry Self-Regulation Is Timelier Than Ever

Sep 21, 2021, 09:00 AM by Eric D. Reicin, President & CEO, BBB National Programs

The business environment is a confounding one. On the one hand, the 2021 Edelman Trust Barometer survey shows the business sector to be the most trusted “institution” in America. Yet, President Joe Biden recently announced a new executive order appealing to government agencies to take 72 different actions to rein in corporations.

Gerald F. Seib recently wrote a piece in the Wall Street Journal that caught my eye. Among his many insights was: “The Republican and Democratic parties are both undergoing a historic transformation, which increasingly makes the business community a political orphan, without a comfortable home in either party.” 

Given the “pushback” that corporations are getting right now in Washington, D.C. — by both political parties — how should organizations respond? For decades, the most responsible companies have found virtue in committing to industry-wide shifts in behavior through participating in independent self-regulation. In light of today’s political environment, independent industry self-regulation may be timelier than ever.

Industry-wide efforts to self-regulate go beyond politics. They reflect a commitment to actual and sustainable change, even more so than individual company choices do. After all, building a consensus around best practices through a trusted institutional process can lead to more collaborative and widespread adoption by industry members, in contrast to unilateral action by lone players.

At BBB National Programs, the nonprofit organization I am proud to lead, we have seen firsthand how industry and nonprofit leaders can collaborate to tackle issues that affect not just businesses, but our society. For instance, our National Advertising Division and its truth-in-advertising case decisions have offered a road map for truthful advertising. Nearly 90% of the time advertisers accept the case decisions rendered by the National Advertising Division or its appellate body, the National Advertising Review Board. If not, the case is referred to the Federal Trade Commission or other government agency for potential enforcement action.

Of course, the path to creating an independent industry self-regulation program can sometimes have twists and turns. That’s almost always because the issues to be dealt with are complex and evolving.

Take the issue of how organizations treat teens' data. Much of that conversation is framed in the terms we use for children. Some regulators and legislators talk of expanding the Children’s Online Privacy Protection Act (COPPA) to cover teenagers. Other countries and jurisdictions are pursuing different routes. After many conversations with our stakeholders — and based on the research on teen-directed mobile app privacy conducted by our monitoring team — we believe this notion of “having COPPA cover teens” represents a critical mis-framing of the teenage privacy issue. Not only are teens tech-savvy enough to evade parental consent requirements, but their privacy needs are different from those who are under 13.

Certainly, teens represent a powerful market segment. A recent Piper Sandler report shows that, despite their relative lack of earnings, the average teen spent more than $2,100 in 2020. Moreover, a recent National Retail Federation report suggests that teens also have significant influence over shopping and purchasing decisions for families. As media consumption has shifted in past decades, teens are also driving consumer trends in a way never seen. What starts as a TikTok trend may just end up defining the success or failure of a brand for years to come.

All of this makes teens’ personal data a valuable commodity. But if there is anything we have learned from our privacy self-regulatory programs, it is that personal data must be respected in transparent and accountable ways.

So, on behalf of our stakeholders, we ask the following:

  • How can we do this effectively for the teenage segment?
  • How do we demonstrate to regulators an effective bridge for teenagers between the protections of COPPA and general consumer privacy protections?

 

Today’s vexing issues in teen privacy are a microcosm of larger issues facing businesses and the consumers they serve. In the Wall Street Journal article, Seib wrote: “With rising populists on the right and ascendant progressives on the left, the question for corporate leaders is how to respond.” 

That is a great question, for both corporate and nonprofit leaders. And I would add another question: How can corporate and nonprofit leaders champion transparency and truth for the communities they serve? 

  • Do not go it alone. When consumer trust in an industry is threatened, working alongside others might feel counterintuitive, but the most effective long-term solution to the threat will be crafted by those best positioned to identify how to make it realistic and sustainable. Working together demonstrates to the public that the involved organizations are dedicated to more than just a temporary or quick-fix patch.
  • Identify the problem. In the face of threatened or lost consumer trust, work with others in your industry or community to identify the underlying problem that needs solving. Sometimes this effort is led by a trusted industry member association, a coalition of varying complexity, or a nonprofit that can help bring everyone together.
  • Champion independent accountability. Vital to transparency with the public is an accountability mechanism. Ensuring your organization abides by independent oversight can ensure a consistent approach to determining compliance with established standards as well as appropriate self-regulatory enforcement for non-compliance that is not influenced by business or revenue goals.

 

Although advertising’s platforms, technology, and techniques have changed dramatically, the system of independent industry self-regulation has sustained, and thrived, proving itself as an adaptable model to evolving business environments. Today, that model of responsible businesses allowing themselves to be held publicly accountable by independent self-regulation is timelier than ever.

Originally published on Forbes.

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