Elon Musk's X: Ad watchdog files FTC complaint against it for not clearly disclosing ads

Elon Musk’s recent advertisement policies for X might have serious consequences after an official complaint was filed with the Federal Trade Commission (FTC) by an online advertising watchdog, Check My Ads.

On Wednesday, Check My Ads, an independent organization monitoring adtech companies, officially lodged a complaint with the FTC, requesting an investigation into X and its advertising practices.

Why is X facing an FTC complaint?

The complaint at the core of this issue revolves around recent changes to X (formerly known as Twitter), where the platform obscures whether a post viewed by a user is an advertisement. Often, users are not informed that they are viewing an advertisement at all. Check My Ads referred to Mashable’s report on the lack of ad disclosure in its formal complaint to the FTC.

Previously, Musk’s platform clearly labeled advertisements with a “Promoted” tag at the bottom of paid ads. However, as reported by Mashable in July, the “Promoted” label ceased appearing on paid posts, being replaced by a new “ad” label placed in the upper-right corner of posts, which was far less noticeable.

A screenshot of an ad on X lacking a label, with the disclosure available only in a drop-down menu.
Credit: Mashable

Ads With No Disclosures

Even more concerning, aside from the less noticeable ad disclosure, were the ads without any label at all. In September, Mashable discovered some ads lacking both “Promoted” and “Ad” labels. Users could only identify these as ads by accessing a drop-down menu providing an option to report the ad.

What’s more troubling, as reported by Mashable in October, a new type of clickbait-style ad emerged on X. These ads not only lacked any disclosure of being an advertisement but also failed to reveal the advertiser behind the ad or provide users with the option to block or report the ad.

A screenshot of a “clickbait” X ad without any disclosure or ability to report the advert.
Credit: Mashable

The policy director of Check My Ads, Sarah Kay Wiley, stated, “X Corp.’s lack of disclosures to consumers, misrepresentations to advertisers, and flawed access to explanations about targeted advertising constitute unfair and deceptive practices. We urge the Commission to determine the extent of these violations and address them to the full extent of its authority.”

Check My Ads suggests that X’s lack of clear ad disclosures potentially violates Section 5 of the Federal Trade Commission Act, leading to consumer deception and an environment vulnerable to scams. The organization also notes that X’s actions might violate the 2022 Stipulated Order with the FTC, where the then-Twitter paid a $150 million fine for deceptively using users’ information for advertising purposes, prior to Musk’s acquisition.

As part of its call for an investigation, Check My Ads wants the FTC to mandate the company to create a public database with ad information detailing advertisers and targeting methods, similar to other platforms like Facebook. Additionally, Check My Ads is advocating for FTC fines and an injunction requiring X to clearly label all advertisements.

Since Musk’s takeover of the company, X has struggled to retain some of its major advertisers, reportedly losing 60% of its advertising revenue earlier this year.