by Scott W.
On March 12, 2013, the Federal Trade Commission issued
its long-awaited update to its 2000 guidance on disclosures in online marketing
The guidance, entitled .com Disclosures: How to Make
Effective Disclosures in Digital Advertising, not only reaffirms many of
the FTC's longstanding principles for effective online disclosures, but also
provides guidance as to how those principles will be applied to new technologies
that have emerged since 2000, such as mobile phones and tablets with more
limited space, banner ads and multimedia messaging, and social media platforms
such as Facebook and Twitter.
The FTC has broad powers under Section 5 of the FTC Act
to protect consumers from "unfair and deceptive acts or practices." Under the FTC Act, the FTC has long required
effective disclosures for claims that would otherwise be deceptive or
misleading without them. .com Disclosures is designed to help
businesses comply with the FTC Act by providing examples and direction on how
to avoid unfair and deceptive practices through appropriate disclosures in
their online and mobile marketing. 
Although the new guidelines do not carry the force of
law, they provide insight into how the FTC will apply the FTC Act to online and
mobile marketing disclosures. Advertisers and marketers are well advised
to review and potentially modify their existing and future online advertising
to ensure they are complaint with these guidelines.
Application of advertising principles to
One of the key questions confronting the FTC when it was
updating its guidance was whether it needed to develop any new principles for
the new devices and forms of communications that have emerged since 2000.
As an initial matter, the FTC emphasizes that the same basic principles of
advertising law that apply to other forms of advertising equally apply to the
new forms of online marketing: that is, advertising must be truthful and not
misleading or deceptive, advertisers must have substantiation for their claims,
and advertising must not be unfair.
The general rules relating to the use of disclosures also
apply to online marketing.
Disclosures are required when an express or implied
advertising claim is likely to be misleading without qualifying
information. The disclosure can only qualify or limit the claim; it
cannot contradict the claim. Moreover, the disclosure must be presented
"clearly and conspicuously" such that the consumer is likely to view it.
The question for advertisers is how to satisfy this requirement given the
unique features and limitations of online ads, including advertising delivered
via social media platforms or on mobile devices.
Factors to be used in evaluating online
The FTC incorporated and expanded its previous factors
for determining whether a disclosure is clear and conspicuous to account for
online advertising on devices such as mobile phones. The FTC now
Marketers should consider whether their disclosures are
adequate from the perspective of a reasonable consumer. If a certain
disclosure cannot be adequately conveyed on a specific device such as a mobile
phone, the FTC recommends discontinuing the claim on that device. The
FTC also encourage marketers to monitor disclosures to make sure they are
actually reaching consumers.
Application of factors to online marketing
The following is some specific guidance from the FTC as
to how these factors will be applied:
Proximity and placement
The basic principle is that a disclosure must be near
the claim in order to be clear and conspicuous.
The following are some principles to guide advertisers in
satisfying this requirement:
The advertiser must also make sure disclosures are
prominently placed so as to draw attention. Disclosures should be in
a font at least as large as the claim they are related to and in a color that
noticeably contrasts with the screen background.
Advertisers should also consider how the disclosure will
be viewed on different devices - what is viewable on a desktop device may not
be as prominent on a smartphone. If a disclosure is too small to read on
a phone, or the text doesn't wrap, then the disclosure is probably not adequate
for mobile devices.
Merely providing disclosures on an online ordering or
check-out page is not adequate if consumers can purchase the same product at a
bricks-and-mortar store or third-party online retailer without ever viewing the
Finally, you need to make sure you provide the disclosure
prominently in all forms of media in which the claim is presented.
Advertisers have long relied on the use of hyperlinks to
provide disclosures. The FTC recognizes that hyperlinks can be effective,
but cautions they should not be used when the disclosure is an integral part of
the claim or conveys important information such as material additional cost,
health, and safety information. Moreover, if you need to use a hyperlink,
the following are some basic principles to follow:
Some online advertisements such as banner ads and tweets
are by definition space-constrained and offered as a teaser to encourage
consumers to click through to the website to get more information. Even
if the ad on a mobile device is small, claims that require qualification are
not excused from the disclosure requirements, and so if those requirements
cannot be satisfied the claim should not be made or should be modified.
The FTC recommends including disclosure language in the ad
when possible, such as "Ad" or "Sponsored" to inform consumers the message was
sponsored by an advertiser, and providing an obvious hyperlink when the
disclosure won't fit. The FTC also encourages creativity in using
scrolling text or rotating panels to inform consumers about the location of a
Pop-up disclosures can alert consumers to disclosures,
but also present their own set of challenges. The FTC warns that advertisers
should not disclose necessary information in pop-ups that can be blocked by
pop-up software. Even if the pop-ups cannot be blocked, some
consumers may not read the information because they don't associate information
in a pop-up with a certain claim or product.
Advertisers can avoid these problems by requiring a
consumer to take an affirmative step in order to proceed past the pop-up, such
as requiring consumers to choose between "yes" and "no" buttons.
Distracting factors in ads
The FTC reiterates the principle that an entire ad will
be viewed in its entirety in evaluating whether a disclosure was adequate.
The FTC recommends that elements such as sound, graphics, links and "add
to cart" buttons do not distract the consumer from viewing the disclosure.
Online ads often contain audio, video and animated
segments with claims that require qualification. The disclosure should
accompany the claim in whichever media the claim is originally made:
For advertisers and marketers
All advertisers and marketers, and their agencies, should
review and apply the guidance in .ecom Disclosures to their online
marketing activities. This requires careful planning and creativity in
applying these principles to the continually changing and evolving world of
online communications, including the creation of new techniques and tools to
ensure effective disclosures.
For more information about the .com Disclosures,
please contact Scott W. Pink.
 15 U.S.C. §45.
 The FTC uses the term "online" marketing to include
advertising and marketing via the Internet and other electronic networks, and
notes that it is device neutral such that it encompasses computers and mobile
devices, such as smartphones and tablets.
This information is intended as a general overview
and discussion of the subjects dealt with. The information provided here was
accurate as of the day it was posted; however, the law may have changed since
that date. This information is not intended to be, and should not be used as, a
substitute for taking legal advice in any specific situation. DLA Piper is not
responsible for any actions taken or not taken on the basis of this
Copyright © 2013 DLA Piper. All rights reserved.
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