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Seller Beware: Consumer Protection Insights for Industry
You've seen them at the bottom of articles on your favorite news websites -- the thumbnails and links under the heading "You May Like" or "From Around the Web" or "In the News. But, you may not give much thought to how they got there. Internet advertising companies purchase this website space and then display advertising and links on behalf of their clients. The National Advertising Division (NAD) recently decided a dispute between two such companies (Congoo, LLC and Taboola, Inc.) over disclosures that are displayed with these advertising blocks. Congoo alleged that Taboola's disclosure practices failed adequately to inform readers that the links were sponsored as opposed to editorial content from the website's publisher.
NAD based its analysis on two principles derived from FTC guidance.
- First, consumers should be told when content is sponsored (see the FTC's guidance to Internet search engines on distinguishing natural search results from paid search ads).
- Second, that it may be an unlawful deceptive practice to mislead consumers into making first contact even if the advertiser later tries to correct the misperception (see Policy Statement on Deception).
NAD concluded that Taboola was required clearly and conspicuously to disclose when the links it places are sponsored. NAD found that Taboola's current "sponsored content" or "promoted content" disclosures were less likely to be noticed and understood by readers because they were located in the right corner (where readers are less likely to look) and in lighter and smaller text. Furthermore, NAD concluded that including the name of the sponsor below the content title was not sufficient, even considered together with the other disclosure. Accordingly, NAD recommended that Taboola modify the disclosures showing that the links were sponsored to make them more clear and conspicuous.
NAD also recommended that Taboola more explicitly convey the nature of the content being linked. NAD was particularly concerned with linked content that appeared to be news articles or sites with original content, but were in fact created by advertisers. NAD recommended that links to such content be discontinued or expressly disclosed as advertising.
Although you may not work for an Internet advertising company, chances are many of our readers deal with Internet advertising issues. Because of this and other recent activity concerning "native" advertising -- i.e., advertising or promotional content that is closely integrated into the flow and feel of websites, apps, and other online and digital publications -- advertisers and website owners should consider whether and how they are disclosing the sponsorship of ads and other content they are placing or that are being placed on their sites.
© Arnold & Porter Kaye Scholer LLP 2014 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.