New FTC Dot Com guide reminds firms to keep disclosures close – and disclaimers even closer

On March 12, 2013, The Federal Trade Commission released new guidance for mobile and other online advertisers that explains “how to make disclosures clear and conspicuous to avoid deception.” The announcement contains the this introduction:

Updating guidance known as Dot Com Disclosures, which was released in 2000, the new FTC staff guidance, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, takes into account the expanding use of smartphones with small screens and the rise of social media marketing.  It also contains mock ads that illustrate the updated principles.

Like the original, the updated guidance emphasizes that consumer protection laws apply equally to marketers across all mediums, whether delivered on a desktop computer, a mobile device, or more traditional media such as television, radio, or print.

dotcom dislosuresFTC Guidance on online advertising, like that for the Endorsement Guides affecting testimonials, blogs, social media marketing and celebrity endorsements, remains premised on the ability of the FTC to identify those specific steps that are likely to violate Section 5 of the FTC Act. Section 5 (15 USC 45) prohibits “unfair or deceptive acts or practices in or affecting commerce.” The Federal Reserve summary of the rule and compliance evaluation is a very helpful tool for all advertisers, not just banks. Violations of the guidelines are not illegal, merely indicators that Section 5 has been violated. In reality, however, most enforcement actions never go to trial. The FTC enters into determinations, levies fines and establishes injunctive relief and specific performance which may significantly intrude on business practices. Most companies agree to these terms rather than facing potentially harsher and more costly litigation. As such, the guidelines are much more than mere advisory guidelines.

The new guidelines attempt to remind advertisers that disclaimers and additional terms must be near claims and specific even in the constrained space of mobile advertising:

If a disclosure is needed to prevent an online ad claim from being deceptive or unfair, it must be clear and conspicuous.  Under the new guidance, this means advertisers should ensure that the disclosure is clear and conspicuous on all devices and platforms that consumers may use to view the ad.  The new guidance also explains that if an advertisement without a disclosure would be deceptive or unfair, or would otherwise violate a Commission rule, and the disclosure cannot be made clearly and conspicuously on a device or platform, then that device or platform should not be used. …

The new guidance points out that advertisers using space-constrained ads, such as on some social media platforms, must still provide disclosures necessary to prevent an ad from being deceptive, and it advises marketers to avoid conveying such disclosures through pop-ups, because they are often blocked.

The guide is long and full of detailed examples. But the list of rules is actually quite intuitive. These are probably the most important:

1.         To make a disclosure clear and conspicuous, advertisers should:

  • Place the disclosure as close as possible to the triggering claim.
  • Take account of the various devices and platforms consumers may use to view advertising and any corresponding disclosure.  If an ad is viewable on a particular device or platform, any necessary disclosures should be sufficient to prevent the ad from being misleading when viewed on that device or platform.
  • When a space-constrained ad requires a disclosure, incorporate the disclosure into the ad whenever possible.  However, when it is not possible to make a disclosure in a space-constrained ad, it may, under some circumstances, be acceptable to make the disclosure clearly and conspicuously on the page to which the ad links.
  • When using a hyperlink to lead to a disclosure,
  • make the link obvious;
  • label the hyperlink appropriately to convey the importance, nature, and relevance of the information it leads to;
  • use hyperlink styles consistently, so consumers know when a link is available;
  • place the hyperlink as close as possible to the relevant information it qualifies and make it noticeable;
  • take consumers directly to the disclosure on the click-through page;
  • assess the effectiveness of the hyperlink by monitoring click-through rates and other information about consumer use and make changes accordingly.
  • Preferably, design advertisements so that “scrolling” is not necessary in order to find a disclosure. When scrolling is necessary, use text or visual cues to encourage consumers to scroll to view the disclosure.
  • Keep abreast of empirical research about where consumers do and do not look on a screen.
  • Recognize and respond to any technological limitations or unique characteristics of a communication method when making disclosures.
  • Display disclosures before consumers make a decision to buy — e.g., before they “add to shopping cart.” Also recognize that disclosures may have to be repeated before purchase to ensure that they are adequately presented to consumers.
  • Repeat disclosures, as needed, on lengthy websites and in connection with repeated claims. Disclosures may also have to be repeated if consumers have multiple routes through a website.
  • If a product or service promoted online is intended to be (or can be) purchased from “brick and mortar” stores or from online retailers other than the advertiser itself, then any disclosure necessary to prevent deception or unfair injury should be presented in the ad itself — that is, before consumers head to a store or some other online retailer.
  • Necessary disclosures should not be relegated to “terms of use” and similar contractual agreements.
  • Prominently display disclosures so they are noticeable to consumers, and evaluate the size, color, and graphic treatment of the disclosure in relation to other parts of the webpage.
  • Review the entire ad to assess whether the disclosure is effective in light of other elements — text, graphics, hyperlinks, or sound — that might distract consumers’ attention from the disclosure.
  • Use audio disclosures when making audio claims, and present them in a volume and cadence so that consumers can hear and understand them.
  • Display visual disclosures for a duration sufficient for consumers to notice, read, and understand them.
  • Use plain language and syntax so that consumers understand the disclosures.

2.         If a disclosure is necessary to prevent an advertisement from being deceptive, unfair, or otherwise violative of a Commission rule, and it is not possible to make the disclosure clearly and conspicuously, then that ad should not be disseminated. This means that if a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.