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FTC Sends Dozens of Warning Letters to Companies Over Advertising Disclosures

It should be standard practice for companies to review the transparency of material disclaimers and disclosures in their advertising before every ad campaign.  However, some companies tend to pack material disclosures into fine print or otherwise minimize their significance.  The Federal Trade Commission (FTC) recently signaled to companies that it is paying attention to print and television ad disclosures.  This follows the FTC’s renewed attention to online advertising as addressed last year in its updated .com Disclosures guidance for digital advertising (for the summary by Hogan Lovells, click here). 

In the latest indicator that companies should be concerned, the FTC sent letters to more than sixty companies, including 20 of the 100 largest advertisers in the United States, warning them that they failed to make sufficient disclosures in print and television advertisements.  The warnings serve as a reminder that organizations should review their disclaimers and disclosures to ensure compliance with “clear and conspicuous” disclosure standards and seek guidance where appropriate.

The FTC, in its warning letters, provided several examples of mistakes made by advertisers.  The FTC stated that some advertisers failed to adequately discuss the steps necessary to purchase a product at a certain price or the fact that buyers would be billed automatically.  Other advertisers did not disclose that purchasers would have to pay for initial or return shipping after a trial period, or did not adequately disclose that product demonstrations were altered.  Some ads even featured false claims (that the advertiser attempted to fix through disclosures) or did not sufficiently disclose issues related to safety or legality.

In the warning letters, the FTC emphasized to advertisers that disclosures should be “clear and conspicuous” and asked them to reply with information on what remedial actions they planned to take.

The FTC also emphasized that it only examined a sample of advertisers, and companies that do not receive a warning letter should not assume that their disclosures are satisfactory.  In a blog post, the FTC advised businesses to remember “the 4Ps” – prominence, presentation, placement, and proximity – when making disclosures.