Dot Com Disclosures and Dark Patterns
The US Federal Trade Commission (FTC) is considering updating and reissuing its guidance document on digital advertising, with the aim of tightening legislation against online consumer manipulation.
The FTC recently requested comments on potential updates to its .com Disclosures: How to Make Effective Disclosures in Digital Advertising guide, which aims to ensure online advertisers disclose information clearly and conspicuously on websites or mobile applications to avoid deceptive statements that may harm consumers.
The FTC issued the guide in 2000 to address illegal online advertising and marketing practices that impact companies and consumers globally. It was revised in 2013 and, although its principles are timeless, much has changed in the digital advertising environment in the last two decades, requiring additional considerations and input from the Commission and the public. Speciﬁcally, the FTC seeks input on addressing “dark pattern” designs and advertising used to manipulate consumers on websites and mobile applications; hyperlink use and labelling; determining online disclosure adequacy when there are multiple webpages consumers must pass through; mobile device and space-constrained advertising; multi-party selling arrangements (online markets, website referrals, etc.); and social media sponsorships and promotions.
The FTC has focused its efforts on increasing enforcement against illegal dark patterns that may deceive or trap consumers into signing up for subscriptions. For example, some websites employ “negative option” marketing, where a consumer’s silence or failure to affirmatively reject a service or product is considered consent; examples include automatically renewed subscriptions, free trials, and pre-notiﬁcation plans.
Websites may also require consumers to navigate through multiple screens or checkboxes to avoid extra charges for unwanted services, or sneak extra products into a consumer’s online shopping cart without the consumer’s awareness or consent. In October 2021, the FTC released an enforcement policy statement forewarning companies that they will face legal consequences if their sign-up processes do not require obtaining a consumer’s informed consent, fail to provide clear and conspicuous information prior to signing up, and make cancellation difficult for a consume.
The FTC aims to increase enforcement in the digital advertising space and seeks to address many of the technology changes that have emerged in the online advertising space in recent years. However, by focusing on clear and conspicuous disclosure, obtaining consumers’ express and informed consent, and ensuring ease of cancellation for consumers, companies selling products and services online worldwide can avoid legal action and consequence.