The New FTC Dot Com Disclosures - the FTC Updates its Digital Advertising Guidelines for the Twitter and Facebook Age

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In what seems like a lifetime ago –and in the fast moving world of the Internet maybe it is – back in May 2000 the Federal Trade Commission issued “Dot Com Disclosures: Information about Online Advertising" to provide guidelines on the applicability of the FTC’s rules to online activities. Back then, the top of mind issues for companies selling and promoting products online was email solicitations and online sales and advertisements. That was before the social media juggernauts of Twitter and Facebook changed the way companies communicate to their consumers and smartphones and tablets emerged as ubiquitous advertising platforms. In the nine years since Facebook opened its doors to the general public and ushered in the age of social media, of the Fortune Global 100 82% have Twitter accounts, 74% have Facebook pages, 79% have branded YouTube channels, and over a quarter use all the above.

Last week on March 12, 2013, the FTC updated its online advertising guidelines to reflect this new environment releasing “.com Disclosures: How to Make Effective Disclosures in Digital Advertising” (“Guidelines”). The Guidelines reinforce that online ads must be disclosed and disclosures must be clear and conspicuous, highlighting the information businesses should consider as they develop ads for online media to ensure compliance with the FTC’s rules in space constrained screens and social media. The Guidelines are important because although they may not carry the force and effect of law, they are the FTC staff interpretations of the laws administered by the FTC and a person or entity that fails to comply with the Guidelines runs the risk of an FTC investigation or enforcement action. The FTC is charged with protecting consumers from unfair or deceptive acts or practices in any medium. And if there is one clear message for companies to glean from the Guidelines – it is that as much as much as things have changed in the digital marketplace, they remain the same for online advertising: Tell the truth, don’t mislead, and if you need to qualify your claims make sure that the disclosure is clear and conspicuous.

To that end, the Guidelines focus on the “clear and conspicuous” disclosures requirement in the online world, providing 26 pages of graphic screen shot examples of do’s and don’ts.  Clear and conspicuous disclosures are required to prevent an ad from being unfair or deceptive. And the FTC is taking a hard line: “If a disclosure is necessary to prevent an advertisement from being deceptive [or] unfair … and if it is not possible to make the disclosure clear and conspicuous, then either the claim should be modified or the ad should not be disseminated. Moreover, if a particular platform does not provide an opportunity to make clear and conspicuous disclosure, it should not be used to disseminate advertisements that require such disclosures.” In other words, the FTC is not sympathetic to the creative challenge of getting across a company’s message in 140 characters or less.

The good news is that the Guidelines provide a common sense approach to developing a clear and conspicuous disclosure and are generally consistent with how companies tend to provide other important information to their consumers. Here is an overview of five practical high level takeaways from the Guidelines companies should keep in mind when assessing their online ad campaigns:

1. Same screen, adjacent disclosures are the best practice.

Proximity and placement of the disclosure is critical.  Across any platform, a disclosure is most effective and consumers are most likely to notice it when placed on the same screen and as close as possible to the information it relates to. Here is an example from the Guidelines of a properly placed “imitation” disclosure in an online jewelry ad:

2. Consumers should not have to scroll to view disclosures, but where scrolling is necessary, steps should be taken to encourage consumer to scroll to the disclosure.

Generally speaking, wherever possible, avoid placing disclosures where consumers might have to scroll in order to view them. However, if scrolling is necessary because the disclosures are lengthy or difficult to place next to the claim they qualify, use text or visual cues to encourage consumers to scroll to the disclosure. For instance, an explicit instruction to “see below for information on restocking fees” would likely pass muster under the Guidelines as opposed to a vague “see details below.” Moreover, if scrolling is necessary, then the disclosure should be unavoidable, i.e., consumers should not be able to proceed with the transaction without scrolling to and then clicking through the disclosure.

3. Disclosures in space-constrained ads, i.e., Twitter ads, should simply say they are an ad.

For space- constrained ads such as those on Twitter or on mobile applications, the disclosure should be incorporated into the ad whenever possible and in certain circumstances short form disclosures may be sufficient under the Guidelines. For instance, in a Twitter advertisement, including the term “Ad:” or “Sponsored:” in front of the tweet should sufficiently disclose to the consumer the promotional nature of the tweet (and it is only three or ten characters, respectively). Notably, the Guidelines explain that a disclosure in a tweet should be included in each and every subsequent tweet with the ad requiring a disclosure. Here is a hypothetical Twitter ad from the Guidelines that adequately discloses that the speaker is a paid spokesperson and qualifies the nature of the product:

4. Hyperlinking to a disclosure is discouraged and, if necessary, should be carefully scrutinized to ensure compliance with FTC rules.

Hyperlinks should not be used to communicate disclosures that are an integral part of a claim or inseparable from it, such as health/safety information or cost information. Do not simply hyperlink a single word or phrase in a text, just add the words “disclaimer” or “more information,” or use a subtle symbol or icon that a reasonable consumer would not view as something other than another graphic. At the end of the day, the consumer should be given a reason to click on the disclaimer not ignore it. Here is an example from the Guidelines of what not to do by simply adding a hyper link labeled “Important Health Information”:

That said, if the details of the disclosure are too difficult to place on the same screen as the claim, and a hyperlink is necessary, then the hyperlink should (a) be obvious and labeled to ensure that the consumer understands its relevance and importance; (b) be used consistent with consumer use of hyperlinks, (c) be placed as close as possible to the relevant information so consumers will notice it, and (d) take consumers from the hyperlink directly to the disclosure. Here is a screen shot of an FTC approved hyperlink to a return fee disclosure:

5. Advertisers should account for viewing of disclosures across all platforms and avoid technology that hinders viewing disclosures.

Websites should be designed so that disclosures are clear and conspicuous regardless of the device on which they are displayed –whether on a browser or smartphone. Advertisers should consider for instance whether a disclosure may be too small to read on a mobile device. Disclosures are more likely to be clear and conspicuous on websites that are optimized for mobile devices or created using responsive design, which automatically detects the kind of device the consumer is using to access the site and arranges the content on the site so it makes sense for that device.

In the above example from the Guidelines, the website is optimized for mobile devices, and both the information about the service plan and the hyperlink to the plan’s prices are immediately adjacent to the camera price they qualify.

Similarly, advertisers should not use pop-ups or other technology that could block the disclosure or otherwise make it difficult to view. For instance, companies should not disclose necessary information through the use of pop-ups that could be prevented from appearing by pop-up blocking software. Likewise, a disclosure requiring Adobe Flash Player should be avoided as it will not be displayed on mobile devices because many smart phones do not support that technology.

Companies advertising online and the marketers that promote their products and services should familiarize themselves with the Guidelines. Although the Guidelines are similar to the FTC’s May 2000 Dot Com Disclosures and confirm the application of general advertising rules to the online world, the Guidelines provide a pragmatic informative update of these basic principles to the constantly shifting social media and mobile ad tech spaces. The foregoing provides a good starting point to assess online advertising practices in light of the Guidelines, but a deeper dive is recommended as the Guidelines are rich in practical content and provide illustrative examples of complaint ads. The Guidelines are available here.