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Advertisers Take Note: FTC Guidance on Effective Disclosures in Digital Advertising

ImageOn March 12, 2013, the Federal Trade Commission issued new guidance which explains how to make clear and conspicuous online disclosures in digital advertisingto avoid deception.

What has changed?

The general requirements for disclosures have not changed; however, the FTC has offered clearer guidance for the inclusion of disclosures in digital marketing channels, in particular social and mobile channels. The guide applies to advertisements that require a disclosure to avoid being perceived as deceptive or unfair, or otherwise violate a Commission rule, and when disclosures cannot be made clearly and conspicuously on a device or platform, then that device or platform should not be used.

What are the standouts for social and mobile marketers?

For marketers promoting or marketing in social and mobile channels, the changes are more pronounced.

The FTC also now requires that marketers take into account responsive design for various mobile and alternate device resolutions and limitations (i.e. mouse-overs that doesn’t work in mobile or touchscreen devices). Preferably, design advertisements so that “scrolling” is not necessary in order to find a disclosure.

The new guidance points out that space-constrained ads, such as on some social media platforms, must still provide disclosures necessary to prevent an ad from being deceptive, and it advises marketers to avoid conveying such disclosures through pop-ups, because they are often blocked.

What is covered in the guide?

While the document provides guidance on what is meant by ‘clear and conspicuous online disclosures', it isn’t intended to provide a safe harbor from potential liability and nor does it address disclosures that may be required to comply with local laws (such as state sweepstake requirements), or other federal laws or regulations (for example, regulations issued by the Consumer Financial Protection Bureau or the Food and Drug Administration).

A guide to The Guide

When it comes to online ads, the basic principles of advertising law apply:

  1. Advertising must be truthful and not misleading;
  2. Advertisers must have evidence to back up their claims (“substantiation”); and
  3. Advertisements cannot be unfair.

 Do read it for yourself though – this isn't exhaustive!

Background on Disclosures

Advertisers must be sure that all express and implied claims of an ad are truthful and substantiated. For example:

  • If an endorsement is not representative of the performance that consumers can generally expect to achieve with a product, advertisers must disclose the generally expected performance in the depicted circumstances.
  • Any solicitation for the purchase of consumer products with a warranty must disclose the text of the warranty offer or how consumers can obtain it for free.
  • Required energy disclosures must provide consumers with clear comparative information.

What makes a disclosure ‘clear and conspicuous’?

Whether a disclosure is “clear and conspicuous” is measured by an ad’s performance: how consumers actually perceive and understand the disclosure within the context of the entire ad, so the consumer takes truthful and substantiated information. A disclosure not seen or not understood may lead to a misleading impression.

Since in general, consumers don’t read an entire website or online screen (or every word on a printed page), disclosures should be placed as close as possible to the claim they qualify. Scrolling increases the risk that consumers will miss a disclosure. In addition, it is important for advertisers to draw attention to the disclosure, make it unavoidable, and not distract attention away from it by use of moving graphics elsewhere, for example.

Disclosures, according to the guidelines, are evaluated on:

  • placement and the proximity to the claim they are qualifying;
  • prominence – disclosures should be displayed in a way they are noticeable by consumers, including the use of adequate font size, color and graphics. Different display options on different devices should be tested.
  • unavoidability – scrolling or hyperlinking doesn’t prevent the disclosure being seen or heard by the user, no matter what device it is viewed on;
  • distracting factors – the guidelines not only apply to the disclosures but to the ad itself. It’s important that the text, graphics and other elements do not distract the user from the disclosure.
  • repetition – disclosures should be repeated on lengthy sites as needed and they should be repeated when the underlying claims are also repeated;
  • audio clarity or duration of disclosure – which must be sufficient for consumers to notice and understand.
  • understandable language – disclosures must be written using clear language and syntax and avoid legal or technical jargon.
  • format and language of the disclosure – must be understandable to the intended audience (i.e. audio disclosure for audio ads, Spanish disclosures for ads in Spanish).

Advertisers should be aware of the following:

  • short-form and abbreviated disclosures might or might not adequately inform consumers of the essence of a required disclosure. So, for example, although “Ad” and “Sponsored” at the start of a tweet are probably enough to inform the consumer, “#SPON” may not yet be widespread enough to be effective – empirical evidence of understanding may be needed.
  • technological limitations such as browser types or pop up blockers may prevent disclosures from being seen: in which case the advertisement should be not be shown.
  • While proximity to the claim is important, disclosures should also be included before the consumer is likely to make a decision to buy, e.g. before they “add to shopping cart.”
  • When a product advertised online can be purchased elsewhere, disclosures should be made in the ad before consumers go to other outlets to make their purchase.

As always, it’s easier to understand when you can see examples. In a follow-up to this article, I'll be looking at some specific examples, and highlight what is clear and conspicuous – and what's not. 

What now?

Brands and their agencies need to review these guidelines, understand them and be assured that compliance forms part of their approval processes.

It’s also worth mentioning that, under the FTC’s Guide for Testimonials and Endorsements, reasonable monitoring of disclosures is required: that is to say, endorsers should be advised of their responsibilities and their online behavior monitored by the advertiser to make sure it is in compliance. 

My thanks to my colleague César Struve, who co-wrote and researched this article.

This blog expresses the views of the authors only. It is not legal advice and is not intended to be relied upon. If you have a legal concern about any of the issues covered in this blog, we recommend you seek independent legal advice.

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