FTC Releases Revised Dot Com Disclosure Guidelines

On March 12, 2013, the Federal Trade Commission (FTC) released “Dot.com Disclosures: How to Make Effective Guidelines in Digital Advertising” (the Guidelines) a follow-up to a 2000 FTC report on online advertising disclosures with updates covering the rise of the use of smartphones and the explosion of social media. These Guidelines allow the FTC to remind businesses that the FTC Act prohibits deceptive practices in online advertising, marketing and sales, regardless of the particular means used to disseminate the advertising claims.

The overarching theme of the updated Guidelines is that all online disclosures be “clear and conspicuous.” The FTC gives both some general considerations for evaluating this standard, along with a laundry list of specific details that online advertisers should be cognizant of when placing the required disclosures. Most importantly, the FTC has taken a hard line on any media platforms that do not provide the advertiser the opportunity to make clear and conspicuous disclosures. If a disclosure is necessary to prevent an ad from violating the FTC Act, and the advertiser is unable to provide consumers with the disclosure using that media platform, the platform should not be used to disseminate those ads.

The FTC also laid out six main factors to consider in making an online disclosure clear and conspicuous: (1) proximity and placement, (2), prominence, (3) other distracting factors in the ads, (4) repetition, (5) multimedia messages and campaigns, and (6) understandable language. Much of the focus in the revised Guidelines is on evaluating proximity and placement for online disclosures to consumers.

While each of these six factors is important, it seems the FTC stressed the first — proximity and placement — the most. The FTC explained that “(t)he closer the disclosure is to the claim to which it relates, the better.” Ideally the FTC would like to see advertisers incorporate disclosures directly into the underlying advertising claim, so that the consumer is alerted to any limitations or qualifying information up front, instead of in a separate disclosure. To ensure that disclosures are in close enough proximity to the claims they qualify, online advertisers should strive to include both claim and disclosure on the same screen. Where it is not possible to provide all required disclosures on the same screen as the claims, the FTC suggests adding suggestive text or visual cues to promote scrolling and lead the consumer easily to the disclosure. Another option is requiring scrolling prior to allowing the consumer to click through to the next step of the transaction.

However, the FTC realizes that not all disclosures are small enough to fit on the same page as the claim, and suggests that if an advertiser does use hyperlinks as a substitute, the hyperlink should be obvious, well-labeled and easy to get to. Cognizant of the speed of technological change, the FTC cautioned advertisers of creating disclosures that only users with certain technological capabilities could view easily. Finally the FTC examined space-constrained ads, which are more common now with the rise of mobile devices with smaller screens and expressed some concern over the adequacy of these disclosures because they can be packed with too much detail, thereby obstructing the essential disclosure.

Regarding the prominence of the disclosure, the FTC guidelines indicate that it is “the advertiser’s responsibility to draw attention to the required disclosures,” and to do so the disclosure should be noticeable to customers through size, color and graphics. However, marketers should be careful not to let a glut of graphics distract the consumer from the essential disclosure. These factors are just as important when viewing ads on different types of devices. If a website displays a mobile-only version on other devices, the disclosures should be clear and conspicuous on both the classic browser and mobile versions.

The FTC also touches on some more minor considerations, such as repetition of disclosures, mirroring of disclosures to the type of media being used to disseminate the claim, and the use of clear language and syntax in disclosures. The FTC recommends that for disclosures appearing on lengthy websites or on large applications, repeating disclosures can ensure that the user sees the important portions of the advertisement that includes the disclosure. Also, the FTC understands that advertisements may appear in a number of forms, and that clear and conspicuous written disclosures may not provide proper notification to a consumer exposed to an audio advertisement. Therefore, marketers should match the type of disclosure to the type of advertisement, while also ensuring that the disclosure lasts a sufficient duration to alert the consumer to the essential portion of the disclosure. Finally, advertisers should strive to minimize jargon and legalese that undermine the clarity of the message; this is especially important when icons or abbreviations are used that the majority of consumers would not readily understand.

Companies currently advertising and marketing online should be aware of the FTC’s updated Guidelines. As companies adapt their advertising and marketing campaigns to new devices or technologies, they should be aware of the factors that the FTC considers important in determining whether disclosures are clear and conspicuous. Generally the FTC has simply incorporated many of the same principles that it espoused in 2000 to marketing on mobile devices, and companies should be aware of this trend in continuing to maintain compliance with the FTC Act. The new Guidelines also include a number of screenshots of explanatory examples of compliant advertising disclosures, and in designing new advertisements, companies should use these appendices as guides. To view the revised Guidelines, please click here.

Arent Fox is continuing to monitor studies related to advertising and online disclosures. For more information, please contact the listed attorneys.