In May 2000, the FTC Dot Com Disclosure requirements were released. That document explained the applicability of the Commission’s consumer protection statutes, rules, and laws to online advertising and sales. In May 2011, the FTC sought to modify and update the document according to the innovative changes in the online world. The updated document was released in March 2013.
The document was not intended to provide guidance on every possible issue associated with online advertising disclosures or to provide a safe harbor from potential liability. The FTC created the document to increase the likelihood that a disclosure is clear and conspicuous. The question is how consumers actually perceive and understand the disclosure within the context of the entire advertisement.
FTC Dot Com Disclosure Requirements
The online business world provides an exciting, fast-paced experience for consumers. As technology improves the experience, it also raises complex questions regarding the applicability of laws governing advertising. The same laws developed to protect consumers in commercial activities apply to activities in the mobile marketplace.
The Federal Trade Commission (FTC) is the main federal agency that enforces advertising laws and regulations. Under the Federal Trade Commission:
- Advertising must be truthful and non-deceptive
- Advertisers must have evidence to back up their claims
- Advertisements cannot be unfair
A business’s failure to comply with these truth-in-advertising laws can result in costly litigation and civil penalties.
FTC Law on Online Advertising
The FTC has broad authority to cover advertising claims, marketing and promotional activities, and sales practices. When a consumer hears or sees an advertisement, federal law requires that the advertisement be truthful and not misleading.
The FTC uses the same standard to investigate suspected violations, regardless of where an ad appears. When the FTC finds that a business has violated the federal law, it files an action in federal district court to stop the fraud and deception. In an effort to decrease the likelihood of violations, the FTC also works to educate businesses about their legal obligation and consumers about their rights.
Since, the FTC’s rules prohibit practices that it has found to be unfair and deceptive, it has produced guides to assist businesses in their efforts to comply with the law. Many of these rules and guides apply to online advertising and other media. The guides reference advertising without limiting the media, therefore encompassing online advertisements.
The Clear & Conspicuous Disclosure Requirement in Online Advertisements
In order to prevent advertisements from being deceptive and unfair, disclosures are required to be clear and conspicuous. Web-based advertising offers unique features that may affect how an advertisement and any disclosures are evaluated. The clear and conspicuous standard is determined by whether the intended information was actually conveyed to the consumers.
Advertisers should adopt the perspective of a reasonable consumer when reviewing their advertisements. In doing this, advertisers should assume that consumers do not read everything on the screen or every word on a printed page. Thus, it is important that advertisers draw attention to the disclosure and place disclosures as close as possible to the claim they qualify. Here are some other considerations:
- The disclosure’s placement in the advertisement and its proximity to the claim is qualifying;
- The prominence of the disclosure;
- Whether the disclosure is unavoidable;
- The extent to which items in other parts of the advertisement might distract attention from the disclosure;
- Whether the language of the disclosure is understandable to the intended audience
- Whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure; and
- Whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration.
The Proximity & Placement of a Disclosure
Proximity of the disclosure to relevant information increases the likelihood that consumers will see the disclosure and relate it to the relevant claim or product. The interactive nature of webpages may affect how proximity is evaluated. Online ads on mobile devices raise other issues because a disclosure that would appear on one screen of a standard desktop might require vertical and horizontal scrolling on a mobile screen.
Hyperlinks provide more space for disclosures because they enable additional information to be placed on a webpage separate from the relevant claim. Although hyperlinks are not necessary to convey disclosures, hyperlinks are a useful means of accessing disclosures that are not necessary to the triggering claim. The hyperlink should be clearly labeled to communicate the specific nature of the information to which it leads. However, disclosures that are an integral part of a claim or inseparable should not be communicated through a hyperlink.
The Use of High Tech Methods for Proximity and Placement
There are various ways to display information, and new techniques are constantly developed. When choosing a method, first consider the technological limitations. Not all browsers support the same technique. Thus, the disclosure may not show or may make it difficult to read. Second, advertisers should not disclose important information through a blockable pop-up. Last, even if unblockable pop-up disclosures are used, consumers may not read the pop-up because they immediately exited the page. To avoid this issue, advertisers can require consumers to take an affirmative action, like checking a box, before exiting the pop-up disclosure.
Show Disclosures Prior to Purchase
Advertisers must effectively communicate disclosures before consumers incur a financial obligation. To do this, it is helpful if the disclosure is provided in the context when the consumer is considering the purchase. If the consumer is completing the transaction online, the disclosure should be provided before the consumer makes the purchase (like before clicking “order now”).
Size matters! Make the disclosures the same size as the claim to which they relate. Color counts! Be sure that the disclosure is a contrast color to the background. Although most webpages viewable on desktops may also be viewable on smartphones, make sure to evaluate the color, size, etc. on all platforms.
Use Plain Language
Understandable language is key to making disclosures effective. Advertisers should opt for clear language and syntax over technical terms. While abbreviations may save space, they may also cause confusion and are not sufficient to avoid a claim being misleading if a significant number of consumers do not understand the meaning.
Consumer confidence in the online marketplace is essential to its continued growth. The FTC will continue to enforce its consumer protection laws to help ensure that advertisements are truthful and not misleading. Businesses should follow the FTC disclosure document when developing online advertisements to ensure compliance and boost consumer morale.
If you operate a business that operates online, you need to follow FTC dot com disclosure requirements. Contact Revision Legal Internet attorneys today to review your disclosures or call us at 1-855-473-8474.