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September 15, 2014

Federal Trade Commission (FTC) Issues Revised Guidelines for Disclosures in Online Advertising

In 2000, the Federal Trade Commission (FTC) issued guidelines intended to assist Internet advertisers in avoiding unfair and deceptive advertising claims under Section 5 of the FTC Act. Since that time, there has been a dramatic rise in the use of mobile devices, such as laptops, smartphones, and tablets, as well as social media. These innovations have drastically changed the manner in which advertising is communicated. Recognizing the need to update its 2000 Internet advertising guidelines, the FTC did so on March 12, 2013, with a publication entitled “.Com Disclosures: How to Make Effective Disclosures in Digital Advertising.” 

The basic thrust of the guidelines (both old and new) is that the “unfair and deceptive advertising” prohibitions of Section 5 of the FTC Act apply in full to online advertising. In particular, if a disclosure would be necessary in traditional media to prevent a claim from being deceptive, it is also required in online advertisements. If there is insufficient space to make the necessary disclosures in the relevant medium (for example, a small mobile screen), the claim should not be made in that medium. In that regard, advertisers are advised not to rely on popups to convey such disclosures, because pop-ups are often blocked by consumers. Importantly, advertisers should ensure that required disclosures will function on all devices and platforms on which consumers might view the ad. 

Under the new guidelines, the FTC has put increased emphasis on the recommended location of required disclosures. The original guidelines provided that such disclosures should be placed “near, and when possible, on the same screen” as the relevant claim. The new guidelines go further and instruct advertisers always to do so “as close as possible” to the claim. “The closer the disclosure is to the claim to which it relates, the better,” according to the guidelines. Again, if sufficient space is not available for a clear and conspicuous disclosure necessary to prevent an online advertised claim from being deceptive in a particular medium, according to the FTC, the claim should not be made in that medium. 

The 2000 guidelines discouraged the use of hyperlinks for health, cost and safety related disclosures. The revised guidelines do the same. Moreover, hyperlinks should be labeled as clearly as possible, and advertisers are cautioned to consider how hyperlinks will function on various programs or devices, including mobile phones. Even if the link in a message leads directly to the necessary disclosures, it is inadequate if consumers are not likely to follow the links to the advertiser’s website to make the purchase, but instead are apt to go to a brick-and-mortar store or a third-party online retailer for their purchase. Accordingly, advertisers should monitor hyperlink usage, and change the method of disclosure if an insufficient number of consumers are clicking on the link to make disclosure effective. 

The guidelines offer specific information and examples – including mock ads illustrating particular principles – advertisers can use in evaluating the proximity, placement and prominence of required disclosures in space-constrained formats such as small-screened smartphones. The new guidelines are a “must” read for companies using online advertising. Click here to view the updated guidelines. 

©2014 Greenberg Traurig, LLP. All rights reserved.

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Senior Counsel

Irving Scher is senior counsel in Greenberg Traurig's New York office. He focuses his practice on antitrust, marketing and unfair and deceptive trade practice litigation and counseling. Mr. Scher has wide-ranging experience in antitrust, marketing and advertising matters across a broad spectrum of products and services. He counsels and represents clients in virtually all phases of government investigations and litigation, including national coordination of cases and trial and appellate work. He has served as lead defense counsel in a multitude of major antitrust, marketing and unfair...

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Ed Chansky practices primarily in the areas of intellectual property (particularly development, selection, protection and licensing of trademarks worldwide) and advertising, sales promotion, and trade-regulation law, including charitable promotions, cause-related marketing, sweepstakes, contests, gift cards, e-commerce, substantiation of advertising claims, social gaming, social media, and all aspects of unfair or deceptive trade practices in a wide variety of industries. A trusted advisor to many national companies, Ed is a frequent speaker at seminars and conferences on advertising and...

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