So said Robert Burton almost 400 years ago, and the Federal Trade Commission (FTC) staff recently made similar comments with respect to online advertising disclosures. On March 12, 2013, the FTC staff issued “.com Disclosures: How to Make Effective Disclosures in Digital Advertising” updated guidelines relating to disclosures made by mobile and other online advertisers. Brand owners should note that although these are guidelines, rather than enforceable regulations, the guidelines indicate ways that the FTC staff believe online advertisements can make effective disclosures under the FTC Act requirements.
Some advertisements require disclosures in order to provide readers with complete information. The recently issued guidelines provide descriptions of how advertisement disclosures can meet the FTC’s standard of “clear and conspicuous,” which can be particularly tricky in the online world given the variety of media and devices that consumers can use. The FTC staff provided 20 pages of text and 22 examples illustrating both compliant and non-compliant disclosures. The staff emphasized that the determination of whether a disclosure is clear and conspicuous is fact-specific and depends on the “overall net impression of the ad.” A banner ad on a web site can differ from an ad on Twitter, which can be different from a product description on a seller’s mobile app, and consequently the FTC’s analysis will vary for each.

The factors that the FTC staff recommend for evaluating whether online advertising disclosures are clear and conspicuous can be thought of as the “8 Ps”:

  1. Placement of the disclosure in the advertisement. Does the disclosure appear on the same screen as the advertisement, even if the user has a mobile device?
  2. Proximity of the disclosure to the claim it is qualifying. The staff prefers disclosures next to the product or service to which they relate, but hyperlinks may be necessary “if the disclosure is lengthy or if it needs to be repeated.” Nevertheless, “required disclosures about serious health and safety issues are unlikely to be effective when accessible only through a hyperlink.”
  3. Prominence of the disclosure. Elements such as type size, color and graphics can all make a disclosure more noticeable to consumers.
  4. Can a user proceed without seeing the disclosure, or is it unavoidable? Demonstrating how the factors can be varied, the FTC staff states: “If scrolling is necessary to view a disclosure [proximity is decreased], then, ideally, the disclosure should be unavoidable—consumers should not be able to proceed further with a transaction, e.g., click forward, without scrolling through the disclosure.”
  5. Do parts of the advertisement distract a user’s attention from the disclosure? The staff is concerned that “flashing images or animated graphics may reduce the prominence of a disclosure.”
  6. Different paths to the site may require the disclosure to be repeated so that consumers can see it regardless of how they get to the site. The staff pointed out that “consumers may access a site through its home page, but others might enter in the middle, perhaps by linking to that page from a search engine or another website.”
  7. Pace, volume and cadence of audio messages, and duration of visual disclosures. The format of the disclosure should match the format of the claim. For example, audio claims should have audio disclosures with a volume and cadence “sufficient for a reasonable consumer to hear and understand it.” With respect to written claims, disclosures should also be written, and not solely audio or video: “Consumers who do not have speakers, appropriate software, or devices with audio capabilities or who have their sound turned off will not hear an audio disclosure.”
  8. Phrasing of disclosures so that they are understandable to the intended audience. Not only should disclosures “avoid legalese or technical jargon,” the FTC staff cautioned: “Icons and abbreviations are not adequate to prevent a claim from being misleading if a significant minority of consumers do not understand their meaning.”

Note that if “it is not possible to make the disclosure clearly and conspicuously, then that ad should not be disseminated.”

Source: Federal Trade Commission, “Dot Com Disclosures” Guidance Updated to Address Current Online and Mobile Advertising Environment (Mar. 12, 2013).

This article was prepared by Sue Ross (sross@fulbright.com / 212 318 3280) of Privacy, Competition and Data Protection Practice.