TechComm – FTC/UDAAP Client Alert: FTC Staff Issues Guidance on Effective Online Disclosures

Companies engaged in online advertising and social media promotions should carefully review “Dot-Com Disclosures – How to Make Effective Disclosures in Digital Advertising,” released by the FTC staff on March 12, 2013. This guidance contains helpful examples and practical tips for staying ahead of enforcement, as the FTC grapples with changes in technology since the FTC’s original “Dot-com Disclosures” were issued, in 2000 – before Facebook, Twitter, or the e-commerce explosion. This new FTC publication addresses disclosure issues across online platforms, including mobile and social media.

Truth-in-Advertising

Truth in advertising remains the FTC’s fundamental mantra in its consumer protection mission. The FTC staff emphasizes that under Section 5 of the FTC Act, advertising should not make false or deceptive representations, explicit or implied, and that all advertising claims must be adequately substantiated – whether it is served up online or through “traditional” media.

Disclosures

The new guidance underscores the basic concept that advertising disclosures needed to prevent deception must be “clear and conspicuous.”  Most of the “Dot-Com Disclosures” guidance reviews the meaning of “clear and conspicuous” in the context of online advertising, with mock ads as illustrations.  Among the FTC staff’s suggestions in “Dot-Com Disclosures:”

  • Disclosures should be “as close as possible” to the relevant claim. 
  • Hyperlinks may be used in appropriate cases, but should be clearly and specifically labeled to inform the consumer about the nature of the link – for instance, a hyperlink should state “Click here for cost of required service plan” rather than merely “For more details” or even “Service Plan Information.”
  • Hyperlinks should not be used for information “integral to the claim” — for example, the product cost, or key health or safety information. The FTC staff advises that such key information should be in the text of the ad.
  • Advertisers should consider how and whether consumers will be able to access and read the disclosures. Thus, if a hyperlink would not be accessible to a consumer on a mobile device, no disclosures should be made via hyperlinks if the ad will be accessed through mobile devices.
  • The space limitations of online and mobile advertising do not exempt advertisers from making required disclosures. “Dot-Com Disclosures” advises advertisers to “Disclose required information in the space-constrained ad itself or clearly and conspicuously on the website to which it links.” Whether disclosure is needed in the message text depends on how critical the information. For Tweets and sponsored Chat messages, for instance, the FTC staff indicates that using “Adv.” as the intro would help to identify a Tweet or Chat as a paid placement or paid endorser.
  • Pop-up disclosures are not recommended, as pop-ups are often blocked. Blocking or inaccessibility would be contrary to the basic point that advertising disclosure must be readily visible and understandable in order to be “clear and conspicuous.”
  • Advertisers should consider type size, contrasting colors, and other visual indicia to draw consumers’ attention to the online disclosures.
  • Advertisers should use clear and precise language, and avoid legal jargon or burying the disclaimer message in the fine print.
  • The disclosure method should match the claim delivery: audio claims should have audio disclosures; written claims should have written disclosures; visual disclosures should “appear for a length of time sufficient for consumers to notice, read, and understand them.”

The Bottom Line

Advertisers are responsible for ensuring that any consumers can see and understand advertising disclosures, whatever the medium or platform. “Dot-Com Disclosures,” with 22 examples of specific mock ads, gives significant insights into the meaning of “Clear and Conspicuous” and the FTC’s perceptions of online and mobile advertising.  

“Dot-Com Disclosures” is one more acknowledgement by the FTC staff that the world is “going mobile.” This acknowledgement comes with a reminder that, regardless of the medium, the message must still be truthful, with all disclosures “clear and conspicuous.” The principles in this guidance are likely to be applied in FTC cases, and to be followed in cases brought by other agencies, such as the FDIC and the CFPB, which apply the same “unfair and deceptive acts and practices” (“UDAP” or with the addition of “abusive” by Dodd Frank Act, “UDAAP”) to advertising and marketing practices of entities under their jurisdictions.

Topics:  Advertising, Disclosure Requirements, Dot Com Disclosure Guide, FTC, Marketing, Mobile Devices

Published In: Antitrust & Trade Regulation Updates, General Business Updates, Communications & Media Updates, Consumer Protection Updates, Science, Computers & Technology Updates

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.

© Squire Patton Boggs | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »