The Federal Trade Commission recently released an
Enforcement Policy Statement on Deceptively Formatted Advertisements. This statement reiterates that Section 5 of the FTC Act, which deals with ”unfair or deceptive acts or practices in or affecting commerce” also applies to online advertisements. Online ads can take many forms, but if an ‘ad’ looks like anything other than an ad to the average consumer, the FTC will deem it deceptive. This renders an ad unpublishable and may force the advertiser to redesign its marketing campaign.
If a consumer is led to believe that an ‘ad’ is independent, impartial, or not from the sponsoring advertiser itself, the Commission will not allow it, arguing that the source of the information is important for a consumer to know. For instance, if a consumer sees what appears to be editorial content on a website, but that content is actually a paid advertisement, their perception of the credibility or weight of the ad’s content can be altered. Knowing the source of that material means that the consumer hasn’t been misled and that they’re able to evaluate the information fairly. The recent Policy Statement explains how the FTC will determine whether the content is an ad and whether or not it is clearly identified as such. The main objective of the recent statement is transparency in online advertising. As a general rule, the FTC’s policies have an overarching focus on protecting the consumer (also seen in the enforcement of the ‘Made in USA’ policy), so this isn’t a surprising move.
The Enforcement Policy Statement reviews advertising formats that can potentially be deceptive, and discusses cases where the Commission has found an ad to be deceptive. This includes news formats like newspapers, sales visits and calls, emails with falsified sender information, use of endorsements, and so forth.
The Statement then reviews the Commission’s specific policies and stand on what is deceptive: that deception occurs when there has been a misleading representation that is material. A misleading representation is material when it can impact consumer choices or conduct regarding the product being advertised, and can happen even when the ad’s actual content itself is truthful—if a consumer can’t tell the ad is an ad, that’s also considered a material and misleading representation. The FTC sees either situation as deceptive.
For added guidance, the FTC has a page on their website depicting seventeen different situations with advice on when companies should think about specifically declaring that the consumer is viewing an ad. They strongly suggest that advertisers need to consider the ad as a whole, not just specific statements or visual effects included within the ad.
The FTC provides a list of factors for businesses to consider when creating and posting their ads, including:
- The ad’s overall appearance
- The similarity between the ad’s written, spoken, or visual style or subject matter and the non-advertising content surrounding the ad
- The degree to which the ad is distinguishable from other content on the site
In addition to regular ads, these considerations should be applied to any click-on or tap-into page ad, where the advertiser provides a snippet of the ad and entices the consumer to click on the ad, taking the consumer to a page where the full ad will appear.
For more information about the Policy Statement and how it could impact your advertising contact Revision Legal’s Corporate attorneys through the form on this page or by calling 855-473-8474.
