What The New FTC Disclosure Guidelines Mean For Your Business

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By: Brian J. Meli

Last month, the Federal Trade Commission (FTC) issued updated disclosure guidelines for online advertisers to help ensure compliance with truth in advertising laws. The new guide, .com Disclosures – How to Make Effective Disclosures in Digital Advertising, is an overdue update to the agency’s initial Dot Com Disclosures guidedisseminated well before smartphones, tablets and social media came onto the scene. While advertising disclosures are, by their fact-dependent nature, hard to standardize, the new guide does an adequate job of clarifying what is and is not acceptable given all the new ways advertisers are using the Internet. The following is an overview of some of the things you need to know before advertising online.

First things first; the consumer protection laws that require disclosures have not changed. Advertising content that has traditionally triggered a required disclosure still does. So if you’re advertising to children, using testimonials or endorsements, or making health, environmental, competitive or other types of claims requiring a disclosure, then you’re still on the hook. If you’re doing those things in an online setting though, the new guide helps ensure you’re doing them in a clear and conspicuous manner, in order to avoid enforcement actions and fines. In other words, the new guide does not deal with the question of when disclosures are necessary, but rather how they should be made online.

Under the new guidance, the how can summed up like this:

Proximity of disclosure to claim: 

In order to be a meaningful, a disclosure must be “clear and conspicuous.” That means different things for different messages and different media, but whenever possible online disclosures (just like traditional ones) should be incorporated into, or at least placed very near the claims they qualify. For example, if you’re advertising “imitation pearls” or “replica collectibles,” then including the words “imitation” and “replica” directly in the copy is appropriate. You should avoid advertising “pearls” and then disclosing the fact that they are imitation elsewhere on screen.

Scrolling:

Some disclosures are simply too long or too impractical to be incorporated directly into a claim. In these cases every effort should be made to place the disclosure on the same screen as the claim. If a disclosure appears in a place where consumers might need to scroll to view it, clear textual prompts or visual cues should be used to encourage scrolling, and these prompts should be directly tied to the disclosure they refer to. For example, “see below for important restocking fees” provides a clear indication that there is a disclaimer to follow. General statements however, such as “details below” are inadequate cues. There should also not be empty vertical space between a disclosure and its claim. The following ad fails on several counts to provide a meaningful disclosure. The disclosure is not in proximity to the claim, it does not provide a prompt to scroll, and it contains blank space between claim and disclosure.

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Because smartphones can require both vertical and horizontal scrolling, placing a disclosure in a different column of a webpage than the claim it modifies can make it unlikely that mobile consumers who zoom in on a claim will scroll horizontally to see the disclosure. Claim and disclosure should therefore also be vertically aligned. In this example, the advertiser fails to do so, making it unlikely that the disclosure is clear and conspicuous: 

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Hyperlinks:

Hyperlink disclosures can be used if a disclosure is lengthy or needs repeating. Disclosures that are an integral part of the claim however—such as important health or safety information, or disclosures inseparable from the claim—should not be communicated through a hyperlink. If the disclosure refers to additional fees that consumers might not expect and the details are complex, they can be hyperlinked, as they are in the following example, but the link should be in proximity to the price point.

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Hyperlinks must be clearly labelled, and convey the importance, relevance and nature of the disclosure. The more specificity they include, the better. There is no one-size fits all word or phrase for a hyperlink disclaimer, but links that simply say “disclaimer,” “more information”, “terms and conditions” or “fine print” are usually insufficient. They must also be stylistically consistent throughout. So if you underline links on your website, you should underline disclosure links as well. If you italicize them, disclosure links should likewise be italicized. And do not use symbols or icons for hyperlinks, because not all consumers will comprehend their meaning.

Disclosures prior to purchase page:

Disclosures must be made when consumers are considering a purchase, not after they’ve made a purchase decision (i.e. after they click an “order now” or “add to cart” button.) This is important because consumers tend to surf multiple pages before deciding on a purchase, and they may not relate a disclosure on an order screen to information they viewed much earlier. It’s also possible that after surfing a company’s website some consumers may make the actual purchase at a physical store, and in that case they’ll miss the disclosure altogether.

Space-constrained ads (banner ads, tweets, etc.):

Lack of space is not an excuse for failing to make a disclosure. Whenever possible, disclosures should be made in the space-constrained ad itself. For example, the following message makes the required disclosures that 1.) this is an ad, and the sender is a paid endorser, and 2.) the proven product efficacy, in this case the amount of weight consumers should generally expect to lose.

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In cases where the required disclosure is too detailed to be disclosed in the space-constrained ad itself; or in special instances, like when an ad is merely a teaser, it may be permissible to make the disclosure on the website the ad links to.

To determine if the disclosure can be placed on the website to which the space-constrained ad links, or if it must be placed in the ad itself, the advertiser should ask the following questions: 1.) How important is the information to prevent deception? 2.) How much information needs to be disclosed? 3.) How much of a burden is it to disclose in the ad itself? 4.) How much information can the consumer be expected to absorb from the ad? and 3.) How effective would the disclosure be if it were made on the linked website? If the answers to these questions tend to favor a disclosure in the ad itself, then that’s where it belongs.

If a product promoted in a space-constrained ad can be purchased in a brick and mortar store, then any disclosures must appear in the ad itself for the same reason as the prior to purchase page disclosure requirement.

If you have a series of space-constrained ads, you must include disclosures in each ad. You shouldn’t assume that consumers will see all the ads and associate them with each other. Multiple tweets, for example, need multiple disclosures.

You should also avoid abbreviating space-constrained disclosures, because a significant amount of consumers may not know what an abbreviation means. Even if you think most consumers will understand, all that’s needed to violate truth in advertising laws is for a “significant minority of reasonable customers” to be misled. If the space constraints of a certain platform prevent you from making a full and accurate disclosure, you should not use the platform to disseminate your message. The following is an example of an insufficient short-form disclosure. It is not clear and conspicuous because many consumers will not understand that “#spon” means the message was sponsored by an advertiser.

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Disclosure prominence:

Always display disclosures prominently so they are noticeable to consumers. That means in a font that is at least as large as the claim itself, and in a color that contrasts well with the background. A good rule of thumb is to display disclosures no differently than you do the claims themselves.

Always account for viewing on different devices. Disclosures should be clear and conspicuous no matter what platform a webpage is displayed on. If a disclosure is too small to read on a mobile device and the text of the disclosure cannot be enlarged, then it’s not clear and conspicuous. If a disclosure is presented in a long line of text that doesn’t wrap and fit onto a screen, it’s also likely inadequate.

Avoid using pop-ups to make disclosures, because many computers will block them. You can make the most straightforward, comprehensive, understandable disclosure in the history of advertising, but if it isn’t seen, it isn’t meaningful.

Also be careful not to bury disclosures in long paragraphs of unrelated text. For this reason, putting disclosures in “terms of use” and similar lengthy agreements is insufficient. Even if it’s proper practice for creating a contractual relationship with a customer, it isn’t enough to prevent a finding of deception or unfairness. Simply because consumers may click “I agree,” that doesn’t mean it’s clear and conspicuous.

Distracting factors:

There’s more to clear and conspicuous than the text of the disclosure itself. All elements of an ad are considered when determining the effectiveness of a disclosure, and other components of the ad can get in the way. While flashing images and animated graphics can certainly reduce prominence, they’re not the only things. In the following example this blogger uses several hyperlinks that could distract her readers and cause them to click away before they get to the end of her post, where she finally discloses that she’s a compensated product reviewer.

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Repeated/multiple disclosures:

Consumers enter websites and applications at different points. For example, while most consumers access a site via its homepage, many others may link to secondary or tertiary pages, or to the middle of pages. They also might not click on every page, or choose not to scroll down to the bottom of every page. Advertisers should therefore consider the need for repeat disclosures. If consumers who see only a portion of an ad are likely to be misled because they’ve either missed a necessary disclosure or not understood its relationship to a claim, then multiple disclosures are advisable.

Understandable language:

Ultimately the question of a meaningful disclosure comes down to whether or not consumers actually perceive and understand it in the context of the ad. While technical jargon, abbreviations and legalese should be avoided, there is no standardized language, just as there is no universally acceptable font-size, color or location requirement. The bottom line is that you must make disclosures that consumers will not only be exposed to, but ones they will comprehend. If both are not true, then your disclosure isn’t clear and conspicuous, and your ad probably isn’t complying with consumer protection laws.

If you’re unsure if your advertising complies with the law, you should seek the counsel of a qualified attorney.

The content of this blog is intended for informational purposes only. The information provided in this blog is not intended to and does not constitute legal advice, and your use of this blog does not create an attorney-client relationship between you and Brian J. Meli. Under the rules of certain jurisdictions, the material included in this blog may constitute attorney advertising. Prior results do not guarantee a similar outcome. Every case is different and the results obtained in your case may be different.

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One thought on “What The New FTC Disclosure Guidelines Mean For Your Business

  1. […] focus on when disclosures are necessary, but how they are made online. In his latest blog post, What The New FTC Disclosure Guidelines Mean For Your Business, our Technology and Legal Consultant Brian Meli, explains what you need to know and how disclosures […]

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