FTC Issues New Guidance on Online Advertising Disclosures

On March 12, 2013, the Federal Trade Commission (FTC) released the long-awaited, updated version of its .com Disclosure guidance.  See Press Release, “FTC Staff Revises Online Advertising Disclosure Guidelines,” Mar. 12, 2013.  These guidelines were last issued in May 2000, although FTC staff has been working on modifications since May 2011.  FTC, “.com Disclosures: How to Make Effective Disclosures in Digital Advertising” at 1 (Mar. 2013).

The basic premise of the 2000 disclosure guidelines remains true today:  advertising laws apply to every advertisement – without regard to the form in which it is communicated (print, television, telephone, radio or online).  Id. at 2.  Specifically, the following principles govern:

1. Advertising must be truthful and not misleading;
2. Advertisers must have evidence to back up their claims (‘substantiation’); and
3. Advertisements cannot be unfair.

Id. at 4. However, as a result of three public comment periods and a public workshop over the past two years, the 2013 guidelines provide some additional recommendations dealing with advertisements made available through online media.  Id. at 1.  Specifically,

 

1. Online disclosures must be “clear and conspicuous.”  The 2000 guidelines recommended that the disclosures appear “nearby.”  The 2013 guidelines, however, suggest placing the disclosure “as close as possible to the claim they qualify.”  Id. at 6.  The new guidelines provide a lengthy discussion of what constitutes “clear and conspicuous,” and even provide visual examples of successful and unsuccessful disclosures in the Appendix.
2. Disclosures must be effective regardless of the type of device used to access the site.  Id. at 14.  Some browsers may display the text differently than others, and the disclosures must work regardless of the device used.  Id.  Similarly, some smartphones can only show a portion of a screen that is otherwise viewable in its entirety on a desktop PC.  Id. If the disclosure cannot be made effectively on a specific type of device, the advertisement should not be made available on that device, or it should be modified so that the disclosure is not required.  Id. at 6. 
3. Disclosures must be visible before the consumer makes the decision to purchase the product.  Id. at 14.  If the consumer may also purchase the product at a brick-and-mortar store, the disclosures must be included in the ad itself, and not merely on the ordering screen, which brick-and-mortar shoppers would not necessarily see.  Id. at 15.
4. Even “space-constrained” advertisements (such as through Twitter) must comply with the disclosure requirements.  Id. at 15.  Again, if “the disclosure needs to be in the ad itself but it does not fit, the ad should be modified so it does not require such a disclosure or, if that is not possible, that space-constrained ad should not be used.  Id. at 16; see also id. Ex. 15 (noting that in some cases “required disclosures can easily be incorporated into a space-constrained ad,” such as “Ad: Shooting movie beach scene.  Had to lose 30 lbs. in 6 wks.  Thanks Fat-away Pills for making it easy.  Typical los: 1 lbs/wk.”).

 Some other points of note:

• “A disclosure can only qualify or limit a claim to avoid a misleading impression.  It cannot cure a false claim.”  Id. at 5.
• “Simply making the disclosure available somewhere in the ad, where some consumers might find it, does not meet the clear and conspicuous standard.”  Id. at 6 (emphasis added).
• Don’t require consumers to scroll to see the disclosure:  “Advertisers should keep in mind that having to scroll increases the risk that a consumer will miss a disclosure.”  Id.; see also id. at 9  (“Scroll bars along the edges of a screen are not a sufficiently effective visual cue” to cause a consumer to look carefully for a disclosure.).
• Hyperlinks to disclosures are permitted, but the hyperlink itself must capture the consumer’s attention – don’t use “disclaimer” or “more information” or “terms and conditions” to indicate that the consumer should read the disclosure.  Instead use a phrase that will persuade the consumer that they need to read the linked text before making a purchase, e.g., “Service plan required” or “Restocking fee applies to all returns.”  Id. at 12 & Exs. 5, 6.
• On a related note, do not use hyperlinked disclosures where health or safety is involved – these types of disclosures should be included within the ad itself.  Id. Ex. 4. 
• Similarly, do not put disclosures in pop-up windows, since users can avoid them completely if their browsers use pop-up blocking software. Id. at 14.
• If you are using a multimedia advertisement, the disclosure should appear in the same medium as the ad itself – thus, if the advertisement is in audio form, the disclosure should also be.  Written advertisements should include written disclosures.  Visual advertisements (such as appended to an online video) should be displayed for a “sufficient duration” for the consumer to read both the ad and the disclosure.  Id. at 20.
• Avoid having visual distractions in the background that would prevent the consumer to be able to focus on the disclosure.  Id. at 19.  “On television, moving visuals behind a text message make the text hard to read and may distract consumers’ attention from the message. Using graphics online raises similar concerns: flashing images or animated graphics may reduce the prominence of a disclosure. Graphics on a webpage alone may not undermine the effectiveness of a disclosure. It is important, however, to consider all the elements in the ad, not just the text of the disclosure.”  Id.

The operative goal with these disclosures is that the consumer actually see them so that they are not confused or mislead about the promises contained in an advertisement.  It is not sufficient for the disclosure to be buried somewhere.  Instead, the disclosures have to be prominently and clearly made, in language that is easy enough for the reasonable consumer to understand.  See, e.g., id. at 6, 20-21.

Other Resources:

Lesley Fair, Fed. Trade Comm’n BCP Business Center, “FTC Reboots .com Disclosures: Four Key Points and One Possible Way to Bypass the Issue Altogether,” Mar. 12, 2013 (concluding that “Advertisers spend a lot of time and trouble dealing with disclosures.  Sometimes there may be no way around it.  But in many cases, the need for a disclosure is really a warning sign that the underlying ad claim may contain some element of deception.  Rather than focusing on fonts, hyperlinks, proximity, platforms, and the whole disclosures rigmarole, how about stepping back and reformulating the ad claim to get rid of the need for a disclosure in the first place?”).