March 22, 2013

FTC Updates Disclosures Guidance for the Technologically Hip and Savvy

Consumer Advertising Law Blog

The Federal Trade Commission (FTC) has released more guidance affecting mobile and online advertising. Originally released in 2000, the "Dot Com Disclosures" guidelines were updated as the agency tries to keep up with the ever-changing world of virtual marketing. After soliciting feedback from the public, the agency released .com Disclosures: How to Make Effective Disclosures in Digital Advertising. The guidance is intended to help advertisers craft necessary disclosures that consumers actually read and understand.

Similar to the original guidance, the updated version emphasizes that consumer protection laws apply across all marketing platforms and devices, including print, TV, Smartphones, Facebook, and Twitter. Just because our ads are coming to us on shinier, smaller, or faster devices, some things will remain old school--like Section 5 of the FTC Act. Advertisers should not lose sight of the most basic principles, like clear and conspicuous disclosures, simply because the mediums on which they advertise have changed and continue to change.

Sticking with the basics, the new guidance reminds advertisers that disclosures that must be made in order to keep claims from being deceptive must be clear and conspicuous and made prior to a consumer's decision to buy (i.e., before they click "Add to Cart"). Although there is no one-size-fits-all approach to disclosures, the following factors come into play: proximity; placement; prominence; presence of distracting elements; the need for repetition; and using language understandable to the intended audience.

In a new take on the old, the guidelines state that if a disclosure won't work because of the device or platform on which the claim is being advertised, the claim should be modified or shouldn't be made on that device or platform. Advertisers should also evaluate how their ads look across a range of devices, and create mobile versions or use responsive design when necessary. In short, if the disclosure won't fit, you must quit (considering that ad). Simple as that--technological limitations will not be an excuse for running afoul of basic truth-in-advertising principles.

Additionally, the new guidance says that disclosures should be "as close as possible" to the triggering claim they qualify. Ideally, qualifying information should be incorporated into the claim itself. If that isn't practical, .com Disclosures provides guidance on making effective disclosures. For example, building on past guidance regarding the use of hyperlinks to lead consumers to relevant disclosures, the new guidance recommends that advertisers label hyperlinks as specifically as they can to make their importance and relevance clear and make them effective across various media and devices. Moreover, using links may not be sufficient, particularly if the advertised product is available in brick-and-mortar stores or from online retailers other than the advertiser--consumers should be presented with relevant disclosures in the ad text itself before going shopping in a store or at another online retailer. In addition, the FTC cautions against putting disclosures in pop-ups, which may be blocked or just ignored. In keeping with the original guidance, advertisers are also advised to avoid using hyperlinks for disclosures integral to the claim, such as those about product costs or health and safety issues. The guidelines also caution advertisers about consumers needing to scroll to find disclosures. According to the guidance, consumers shouldn't have to scroll down the page to find disclosures. But, if scrolling is necessary, the ad should contain visual cues to prompt consumers to scroll down or make the disclosures unavoidable--i.e., require the consumer to scroll through them before moving on. Finally, although the guidelines say that advertisers are not required to utilize tools that can help monitor the effectiveness of disclosures, such as hyperlink click-through rates, the FTC advises advertisers not to ignore the data they do have.

The new guidelines include examples specific to the world of "tweeting." Using a fictional celebrity endorser, the .com Disclosures note that a tweet endorsing a product with merely a link to the product's website is insufficient. Celebrity tweeters still have to follow the requirements laid out in the Endorsementand Testimonial Guides, which we blogged about. Those Guides state that celebrities have a duty to disclose their relationships with advertisers outside the context of traditional ads (like Twitter). It should be clear to followers if a celebrity is being compensated for a product or service they're talking about on social media. According to the FTC, these types of endorsements should clearly denote that it they are advertisements. The new guidelines go further, noting that using "Ad" or "Sponsored" at the beginning of a tweet would likely be sufficient, but that the use of hashtags to indicate that a tweet or post is sponsored (i.e., #spon, #paid or #samp) may not be. Depending on the content of the sponsored tweet, the tweet may also need to disclose typical results for the product in accordance with the Endorsement Guides. Using links to make disclosures in tweets may not be sufficient for the reasons discussed above.

In recent years, the FTC has made an effort to update various guidance documents to account for changes in the mobile marketplace and advancements in advertising that have arisen in the new digital age. The new .com Disclosures specifically address some of the issues advertisers face in this age of new technology and social media. While acknowledging that these guidelines will prove challenging to advertisers, the agency has stuck to its consistent message--necessary disclosures are required, regardless of how you're conveying your message and deceptive advertising will not be tolerated.

© Arnold & Porter Kaye Scholer LLP 2013 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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