Dot Com Disclosures 2.0: FTC Updates Online Disclosure Guidelines to Address Changes in Digital Advertising

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact

Nearly thirteen years after issuing guidelines governing online advertising, the Federal Trade Commission (“FTC”) recently updated its so-called Dot Com Disclosures to take account of the many changes to the online world that have occurred over those intervening years.  Whereas most digital advertising thirteen years ago was popping up or scrolling across our computer screens, today’s digital advertising is far more integrated into our online culture—whether as email offers to invitation-only flash sales (“50% off; today only!”), sponsored Twitter feeds, solicited blog reviews, or advertisements dressed up to look like news (“THIS JUST IN:  Scientists have discovered a revolutionary breakthrough in weight loss.”).  Into this Wild West of digital advertising, the FTC has ridden with some updated guidelines to help marketers avoid running afoul of false advertising law.

The FTC’s new guidelines, issued on March 12, are intended to provide guidance to ensure that digital advertising is truthful, fair, and not misleading.  The guidelines are focused primarily on the issue of disclosure—i.e., words necessary to limit, qualify, or explain a claim.

As with any FTC guidelines, the revised Dot Com Disclosures are staff interpretations of laws administered by the FTC (so following them is a good idea), but they do not have the force and effect of law.  This means that if the FTC were to pursue a marketer for failing to follow the guidelines, it would have the burden of proving that the marketer’s ads were actually unfair or deceptive.

On the other hand, following the guidelines will not necessarily inoculate a marketer from a false advertising claim.  While it certainly minimizes the risk associated with disclosures, there are other guidelines and rules that apply to online ads, and failing to follow these could result in a problem.  For example, great disclosures in an ad making unsubstantiated claims will not cure the untruthful and deceptive nature of the ad.

The updated guidelines provide detailed examples focusing on modern-day technology and modes of advertising, but the underlying principles are well-established and can be summed up in three bullet points.

  • When Disclosures Are Required:  If an ad makes express or implied claims that are likely to be misleading without qualifying information, a disclosure is required.  For example, if an ad offers “3/4 ct. diamond earrings” at a price, and the actual weights of the diamonds sold at that price range from .72 carats to .78 carats, a disclosure is necessary.
  • How Disclosures Must Appear:  Disclosures must be clear and conspicuous.  In general, this means that a consumer must be able to see and understand the disclosure quickly, without much effort.  Disclosures are clear and conspicuous when they: (a) are placed close to the claim they are qualifying, (b) appear prominently in the ad, (c) are repeated as necessary to avoid being overlooked, (d) are made prior to purchase, (e) are written in language that is easy to understand, and (f) in the case of audio disclosures, are at a volume and cadence that can be readily heard and understood.
  • When Even a Clear and Conspicuous Disclosure Is Ineffective:  Disclosures can never cure a false claim.  If a disclosure provides information that contradicts a material claim, the disclosure will be ineffective to prevent deception. 

The value in the revised guidelines is the application of these well-established principles to specific examples of digital advertising.  Here, capturing the essence of revisions in bullet form is a bit more challenging, but some of the more interesting points are summarized below.

  • Hyperlinking to a Disclosure:  While hyperlinks are often helpful in space-constrained ads, or where the disclosure would otherwise need to be repeated, it is easy to violate the “proximity” requirement when using hyperlinks.  Accordingly, hyperlinks should not be used where the disclosure can be easily made in the text of the ad.  If you do use hyperlinks to make disclosures, make sure that: (a) it is clear to consumers that they can click on the hyperlink to get more information, (b) the hyperlink is easy to find and conveys the importance of the information to which it leads, and (c) the hyperlink is compatible with the various programs and devices on which consumers might access the ad.
  • Pop-up, Scrolling, and Other Non-Stationary Forms of Disclosure:  As a rule, fixed and static disclosures are more likely to be clear and conspicuous than those that appear, and then disappear, on a screen (even though the latter category may be more likely to capture a consumer’s attention).  The reason for this is largely technical – i.e., some browsers or devices do not support techniques for displaying non-stationary disclosures, or, in the case of pop-up disclosures, other software may prevent their use.  If you do use non-stationary forms of disclosure, be sure that the disclosures are actually reaching the consumer.
  • Space-Constrained Ads (a.k.a. Sponsored Tweets):  Marketers cannot circumvent disclosure requirements simply because ads are made in a space-constrained medium.  Even in the world of Twitter, where a marketer is limited to 140 characters, the FTC expects ads to comply with its disclosure guidelines.  Marketers must disclose that a space-constrained ad is sponsored and, if applicable, that it is a paid endorsement.  In addition, if the ad makes claims that that are likely to be misleading without qualifying information, the marketer must at the very least include a link to such information, and must relay in the ad that the link contains important qualifying information.   Whether this can be done in 140 characters is questionable.  If it cannot, then the marketer should avoid running the ad.

Any company engaged in digital advertising should quickly familiarize itself with the FTC’s revised guidelines.  Online advertising is an area of intense focus at the moment, and flouting the FTC’s guidelines is a risky proposition.  While failing to adhere to the guidelines is not a per se violation of the false advertising laws, it does create a risk of an FTC investigation or enforcement action.  And marketers should not be tempted to play the odds.  Just because the FTC has not historically focused on your industry does not mean that it will not do so in the future.  In addition, virtually every state has its own set of regulators looking at potential false advertising claims, and state regulators often borrow from FTC guidelines in assessing the truthfulness of advertising claims.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP - Trademark, Copyright & Unfair Competition | Attorney Advertising

Written by:

Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact
more
less

Foley Hoag LLP - Trademark, Copyright & Unfair Competition on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!