On March 12, the Federal Trade Commission (“FTC”) published new guidance detailing how advertising disclosures should be made online. Disclosures are necessary to qualify or limit advertising claims that would otherwise be deceptive, unfair or give misleading impressions.
The FTC’s previous guidance on disclosures was issued seven years before Apple introduced the iPhone, long before the proliferation of Twitter, Facebook and other social networking and media platforms and before sponsors commonly compensated the sources of endorsements made on those platforms. The FTC expects advertisers to follow the revised guidelines immediately.
The new guidance states that online disclosures must be clear and conspicuous, despite challenges related to social media and use of small screen mobile devices. It also incorporates the FTC’s 2009 “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” which requires a person speaking on behalf of a company to clearly state any relationship with a brand and whether they have received compensation.
If a particular platform does not provide an opportunity to make these clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.
The FTC provides several examples of compliant advertisements. One example attempts to provide necessary disclosures for a weight-loss pharmaceutical product advertisement within a 140-character Twitter post. In the Twitter example, a compliant disclosure might state that the weight-loss claim is not typical. The advertiser could also make the hypothetical sponsored tweet compliant by starting the content with “Ad” and by including a disclaimer at the end, such as “Typical loss: 1lb/wk.”
Disclosures must be placed on a webpage in such a way that readers are aware of them before being distracted by other design elements. For example, the guidelines describe a hypothetical example of a blogger putting a disclosure that she reviewed a product received for free at the bottom of the page, away from the text of the endorsement, and after several hyperlinks to unrelated information. In that scenario, FTC said the placement “could distract readers and cause them to click away before they get to the end of the post.”
Disclosures that are an integral part of a claim must be placed on the same page and immediately next to the claim and be sufficiently prominent so that the claim and the disclosure are read at the same time. It is not sufficient to refer the consumer somewhere else on the page, such as through scrolling, or to a separate webpage to obtain the information. This is particularly true for disclosures about cost, health and safety.
In a limited number of scenarios not involving health, safety or cost, advertisers may place disclosures on a secondary website. However, this approach is additionally limited to those situations when the product for sale is only available from the advertiser and the potential customer has no choice but to view the disclosures on the advertiser’s landing page before placing an order. If the reader could easily go to a different entity’s website to buy the recommended product, then the disclosures must be part of the original advertisement.
Industries also regulated by the Food and Drug Administration (“FDA”) are already familiar with the challenges of providing both disclosures and advertisement within size-restricted spaces. In 2009, the FDA issued untitled warning letters to 14 of the world’s largest pharmaceutical companies for not including fair and balanced risk information in small text ads on Google and other search engines. The FDA’s investigation into Google went even farther, accusing the company of using its AdWords platform for drug advertisements that were illegal. Now Google AdWords restricts the promotion of health care-related services and products, including online pharmacies, prescription drugs, medical devices, dietary supplements, clinical trial recruitment and certain in vitro diagnostic tests. In 2012, Google even complied with an FDA request to completely disable the AdWords accounts of nutritional supplement companies offering “detox” or “chelation” nutritional products as the agency believes such claims to be baseless, misleading and potentially dangerous to health.
Practical Takeaways
The FTC Act’s prohibition on “unfair or deceptive acts or practices” broadly covers all advertising claims, marketing and promotional activities and sales practices. The Act is not limited to any particular medium or industry.
In order 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.
- When a space-constrained ad requires a disclosure, incorporate the disclosure into the ad.
- 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.
- Display disclosures before consumers make a decision to buy — e.g., before they “add to shopping cart.”
- Repeat disclosures, as needed, on lengthy websites and in connection with repeated claims.
- If a product or service promoted online 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.
- Use plain language and syntax so that consumers understand the disclosures.
If you have questions about the FTC’s, FDA’s or other agencies’ regulation of advertising, please contact Mark Dahlby at 414-721-0902 or mdahlby@wp.hallrender.com or your regular Hall Render attorney.
