By Matt Corley
October 11, 2016

“Patrick Murphy has abandoned his responsibility to support veterans” while his opponent for Florida’s Senate seat, Sen. Marco Rubio “is clearly a voice for veterans,” according to new ads that voters in Florida may see the next time they sign on to Facebook or try to watch their favorite TV show online. The videos are part of a “six-figure digital ad-buy” that Concerned Veterans for America (CVA), a Koch network-backed non-profit, announced on September 28. The group is also targeting races in Pennsylvania and Nevada with online ads praising the Republican Senate candidates in each state.

But thanks to a loophole in the law, CVA has not reported these ad buys to the Federal Election Commission (FEC), though the group has reported other spending. If the same exact ads were run during the same exact show on television, CVA would have been required to file reports with the FEC within 24 hours of publicly distributing the ads.

Paid ads that mention political candidates by name, even if they don’t expressly advocate for their election or defeat, must be disclosed if they are made within 60 days of a general election and are targeted at relevant voters. But as CREW has previously noted, the rules don’t apply to ads that only run on the Internet, where political advertising is increasingly being targeted. Under current law, groups that spend more than $10,000 a year to make and run these “electioneering communications” ads are only required to report the spending to the FEC if the ads are run on broadcast, cable, or satellite TV.

CVA isn’t new to exploiting this campaign finance loophole. In late October 2014, the group announced a “six-figure, statewide advertising buy, including both mail and digital ads,” targeting Sen. Jeanne Shaheen (D-NH) as she battled for re-election. Despite spending at least $100,000 on the campaign, CVA never reported anything to the FEC.

Other non-profits affiliated with the political network organized by billionaires Charles and David Koch also exploited the digital electioneering communications loophole in 2014. Americans for Prosperity (AFP), for instance, issued press releases in September 2014 announcing six and seven-figure ad buys on “digital platforms” targeting 11 Democrats in tight re-election races. Though AFP disclosed some web ads to the FEC that year as independent expenditures, none of the group’s reports include any September expenditures.

Two other central Koch network groups, the LIBRE Initiative and Generation Opportunity, also announced ad campaigns during the 2014 electioneering communications window without filing any reports with the FEC. It’s unclear, however, whether those two groups money, or how much they spent, to place the ads online as their press releases did not include dollar figures.

It’s not a coincidence that non-profits that do not have to disclose their donors are the most likely to exploit this loophole. By not reporting the money to the FEC, it’s easier for the groups, who are not allowed to spend more than half of their budgets on politics, to avoid reporting the expenditures as election-oriented on their tax returns. The IRS’s standards for defining political campaign intervention are broader than the FEC’s and often capture electioneering communications. Indeed, a federal judge recently ruled that at a minimum, “many or even most electioneering communications indicate a campaign-related purpose.”

Both the Libre Initiative and Generation Opportunity, for example, told the IRS they spent no money seeking to influence elections in 2014. Americans for Prosperity, for its part, appears not to have reported its September ad buys either since the amount the group told the IRS it spent on politics in 2014 equaled the amount it reported to the FEC as spending on independent expenditures. The group’s digital electioneering communications clearly were not included.

FEC Commissioner Ann Ravel has sought to open a discussion of whether the current campaign finance rules effectively deal with the changes in technology and communications that are revolutionizing the way campaigns are run. Such a discussion would undoubtedly include an examination of the digital electioneering communication loophole. But the mere suggestion of re-examining the rules led to claims of “censorship” and even death threats against Commissioner Ravel.

When CREW suggested potential solutions to close the loophole, including looking at whether the language of the law could be construed to cover electioneering communications carried on the Internet, FEC Commissioner Lee Goodman accused us of proposing “an insidious regulatory scheme” to regulate political speech that is posted on the Internet at little or no cost. He was mistaken about CREW’s aims, but such a response means the loophole is likely to remain unaddressed.

There is no good reason for the same paid political ad to be treated differently in terms of disclosure if it is run on the Internet instead of on broadcast TV, particularly as viewership for digital television increases. This shouldn’t be a controversial position, but apparently it is.

In the meantime, groups like CVA are free to spend millions of dollars on online ads targeting candidates right before Election Day, and the public will remain in the dark about the details.