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FTC Updates Guidelines for Online Advertising Disclosures

Recognizing the changes enabled by mobile devices and social technologies, the Federal Trade Commission has published the first update in over twelve years of its guidelines for online advertising.

The new guide, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, parallels the 2000 original, Dot Com Disclosures: Information About Online Advertising, and uses much of the same language and approach. But there are differences, of course; and some ambiguity remains regarding what constitutes appropriate disclosure in some key circumstances.

For example, the guide states that disclosures must be clear and conspicuous on all devices and platforms on which the associated ads are disseminated. Little specific guidance is offered, however, regarding how far advertisers must go to ensure whether disclosures remain clear and conspicuous when devices, platforms, operating systems, apps, and software packages are updated or used in novel ways. For example, are advertisers responsible when a disclosure appropriate for a television broadcast is streamed to a small mobile device with inadequate screen resolution?

Advertisers, the guide suggests, should also use best practices to reduce the likelihood that disclosures will be deleted when space-constrained ads (e.g., commercial Tweets) are republished. Again, little guidance is offered as to how advertisers should do this or what forms of republication advertisers should consider. Advertisers may wonder how to approach screenshots posted on blogs, videos posted on sharing sites, links posted on social media platforms, and other increasingly common scenarios.

The Commission’s Business Center blog posted some key points that businesses should take from the report:

  1. Traditional consumer protection laws apply to all advertising, no matter how innovative the technologies and marketing strategies are.
  2. The Business Center joins us in noting that the guide states that if a disclosure cannot be clearly and conspicuously presented on a particular device or platform, the associated advertisement should not run on the device or platform. If a disclosure is necessary to prevent an express or implied claim from being deceptive or unfair, the disclosure must be clear and conspicuous on all platforms and devices on which the ad appears.
  3. The design of disclosures is important: disclosures should be presented as close as possible to the relevant claims; hyperlinks should be labeled conspicuously; and thought should be given to how hyperlinks will work across different platforms.
  4. Businesses should, as appropriate, design disclosures with the space constraints of social media platforms and mobile devices in mind. Pop-ups are not a good solution, however, because pop-up blockers are widely used.

The Business Center blog post concludes with the suggestion that the need to post a disclosure may indicate that the underlying advertisement contains deceptive elements. Rather than going to the trouble of designing a clear and conspicuous disclosure that meets FTC guidelines, the blog questions whether it wouldn’t just be better to redesign the ad.

There are several other noteworthy new aspects of the guide.

The FTC explains that if an expressed or implied claim is likely to mislead reasonable consumers in the absence of qualifying information, that information must be disclosed. Disclosures may also be required in order to ensure that consumers receive material information or to further public policy. But no matter what the reason is for the need for a disclosure, the disclosure must be clear and conspicuous.

The new guidelines offer several factors to consider when evaluating whether disclosures are clear and conspicuous. The basic requirement is that disclosures must be prominent and unavoidable. It is not enough, however, for disclosures to be prominent and unavoidable just on a particular device and platform. That means that advertisers must consider how advertisements will appear across platforms and devices. For example, disclosures that are prominent and unavoidable on a desktop screen may be too small to read on a smartphone. Pop-ups, Flash content, and mouse-overs are examples that the FTC provides of tools that might make for prominent and unavoidable disclosures on some platforms for some users. But those disclosures may not work for all users. That means that those tools should not be used to provide disclosures that prevent ads from misleading consumers.

The guide notes that advertisers should not rely on the fact that a group of ads taken together provides sufficient disclosures. Each ad must be viewed on its own, and disclosures must be clear and conspicuous in each ad that individually requires a disclosure. Surprisingly, the FTC extends this requirement to republished ads. “Advertisers,” the guide states, “should employ best practices to make it less likely that disclosures will be deleted from space constrained ads [(e.g., Tweets)] when they are republished by others.” Beyond placing disclosures at the beginning of a space-constrained ad or leaving enough free space in an ad to make sure the disclosure is not lost in republication, the FTC offers little guidance as to what those “best practices” would be.  The Business Center blog post indicates that future posts on the blog will contain more information about .com Disclosures. Advertisers would thus be advised to monitor that blog and other FTC statements in which in which republication best practices are discussed.

A final item of note from .com Disclosures concerns disclosures about negative option trial offers — that is, transactions in which a buyer’s failure to reject an offer or cancel an agreement is interpreted as an assent to the offer or agreement. The FTC states that if an advertiser is selling a product or service along with a negative option trial for an unrelated product or service, heightened disclosure mechanisms may be necessary. When the consumer’s attention is focused on the primary product or service, the FTC claims, the consumer may not pay attention to disclosures about the unrelated product or service. The FTC therefore recommends that businesses should require consumers to confirm that they have read the disclosures by indicating their choice to accept the negative option using choice mechanisms that are not preselected and that are presented prior to the primary product being placed in the consumer’s shopping cart.

James Denvil, an associate in our Washington office, contributed to this entry.