THE FTC UPDATES ITS .COM DISCLOSURES GUIDANCE -- Focus on Mobile and Space-Constraints; Frowns Upon Certain Common Practices

On March 12, 2013, the FTC released its long-awaited update to its year 2000 Dot Com Disclosures guidance; a document issued to help businesses develop legally compliant online ads.  Having recognized that much has changed in online advertising since 2000, the FTC’s update focuses not only on web sites, but also on social media activities and mobile.  The updated guidance also makes clear that the FTC does not agree with some of the ways marketers are currently making disclosures online. Before we discuss what is new, is important to note what is not new.  First, as was originally stated in the year 2000 guidance, the same laws that apply to advertising in other media (e.g., print, TV, radio) apply online.  Second, “clear and conspicuous” remains the standard for achieving legally compliant disclosures.  Third, whether an ad is deceptive, unfair or otherwise non-compliant is a fact-specific analysis.  Complying with the new guides is highly recommended, but doing so is not a safe harbor.  Rather, employing the tactics recommended by the FTC may, as the FTC puts it, “increase the likelihood that a disclosure is clear and conspicuous.”  As is the case with any FTC guide, failure to comply may result in an FTC enforcement action.

DO THE UPDATED GUIDES APPLY TO MY CONTENT?

We are often asked whether a particular form of communication by a brand is “advertising”

subject to all the typical laws and rules that govern advertising.

Despite the FTC’s use of the phrase “digital advertising” in the title of its updated guide (which could reasonably confuse marketers to think about paid banner ads), the updated guides apply to all online and mobile advertising and sales practices - regardless of industry (except for the business of insurance, airlines, banks and common carriers).  The focus of the guidance is to help companies make material disclosures about ads, offers, sales and promotions in a way that complies with the laws enforced by the FTC.  The guidance is applicable to the content on a brand’s web site (not just the homepage, but think about the entire consumer experience – from browsing to check out), to social media activities (for brands and brand ambassadors), to ads placed by or on behalf of a brand on a third party site or platform and all of the same on mobile sites and within apps; it is not just paid banner ads.  In an effort to make the updated guidelines stand the test of time, the FTC wrote that “online” is device neutral.

OK, IT’S AN AD.  SO NOW WHAT?

If we determine that an ad requires disclosures or disclaimers to avoid deception, the FTC says it is best to try and incorporate the disclosures into the triggering claim itself.  Of course, that is not so easy to do given space constraints and complicated offers.  When disclosures must be separated from the triggering claim, make those disclosures in a “clear and conspicuous” manner.  There are a number of factors to consider when trying to meet the clear and conspicuous standard -- some we have considered for many years (e.g., place the disclosure as close as possible to the triggering claim, avoid distracting content, consider the size and color of the disclosure statement, use audio disclosures when making audio claims, etc.), while others are more recent considerations.  For example, the FTC advises that marketers must consider all platforms where ads will be available.  A great disclosure on your main web site may get completely lost when viewed on a mobile browser.  Industry experts are now talking about developing for mobile first.   The FTC is also stressing that marketers need to understand the platforms on which they are advertising.  For example, with respect to tweets, the FTC advised that relegating disclosures to a subsequent post is not an acceptable practice given that intermittent messages could get posted before the second post appears, thereby disconnecting the claim from the disclosure.

CLEAR AND CONSPICUOUS – LINKING TO THE DISCLOSURE

Closer is better.  Okay, got that.  But close is not available.  Can I link to the disclosure?  Maybe.  First, the FTC advises that certain cost information and health and safety disclosures should not be separated from the triggering claim via a link.  But if the disclosures are not in those categories, the FTC indicates that linking to a disclosure may be possible if the link adheres to the following standards (the more met the better).  Consider if the link:

(i)            is obvious and looks like a link (if available, use color and underscoring);

(ii)          is appropriately labeled to convey the importance, nature and relevance of the information it leads to:

1.  the link must be titled to indicate why people should click on the link and what they should expect to read if they click on the link.
2. General words like "DISCLAIMER" or "IMPORTANT INFORMATION" are not enough.
3. Merely making a word a link is not sufficient (e.g., "Buy One Get One Free" does not work).
4. Relying on a tiny URL that does not describe the information to be learned by clicking on the link (e.g., bit.ly/56765) is not sufficient.

(iii)         directly results in the page on which the disclosure is present and if that disclosure is readily available on that page without distracting elements.  The FTC has invited marketers to assess the effectiveness of the link overtime and monitor click-through rates and make changes accordingly;

(iv)         must be clicked to begin the transaction (for example, if the consumer can see the ad and then go into a brick and mortar store to complete the transaction, placing the disclosures on a separate web site away from the original post is not going to be acceptable).

CLEAR AND CONSPICUOUS – WHAT ABOUT SCROLLING?

Avoid requiring people to scroll to see a disclosure about an ad, but when it is absolutely necessary:

(i)            use text or visual cues to encourage consumers to scroll to view it.

(ii)          avoid formats that discourage scrolling (like mobile optimized web sites).

(iii)         do not rely on the presence of scroll bars on the edge of the screen to signify there is more to read.

(iv)         do not place disclosures below links that normally signify the footer or end of a web page (e.g., privacy policy).

(v)          consider making the disclosure unavoidable by requiring a person to scroll to the end of the disclosure before being able to proceed.

(vi)         avoid large amounts of blank space between the triggering claim and the disclosure.

CLEAR AND CONSPICUOUS - DISLCOSURES GENERALLY

The FTC made a number of additional points about online disclosures throughout the updated guidance that are important to keep in mind when creating online content.

• The checkout page of an online store is not an acceptable place to put all of the material disclosures for a product, service or offer.  Those disclosures can be on that page, but they also should be made at the time the original claim is made – in context.
• Disclosures in a terms of use document are not going to be deemed effective for a claim made elsewhere.
• It is helpful if your disclosure is unavoidable.
• Consider whether other parts of your ad distract from the disclosure.
• Is repetition necessary?  Consider how many times the claim is made?  Also, consider how consumers enter a site and travel through it once there.  If a visitor can bypass a disclosure by traveling through the site differently than another visitor, consider including the relevant disclosure in multiple places so it is not missed.
• Using and creating new technologies to provide disclosures can be good, but the FTC cautions that a technology that works great in one medium may not work well (or at all) on other mediums.  For example, pop-up disclosures can be blocked or completely not supported by a particular browser.
• The FTC invites marketers to use best practices to maintain disclosures where an ad is likely to be syndicated.  The FTC suggests putting the disclosures at the beginning of the ad (which is likely an untenable solution for most marketers) or not using all of the available space so that comments added to the ad by people who republish it do not cause the disclosure to be lost.
• For offers that come with complicated pricing structures (such as negative option plans), consider requiring the customer to acknowledge a disclosure by making her choose between multiple answer options, none of which is preselected.  And do this before the item(s) are placed in the shopping cart.
• Place your disclosure as close as possible to the triggering claim because the FTC advises us to assume that consumers do not read an entire web site or even an entire screen.
• Using abbreviations (such as “spon”) to explain that a post is a paid ad are not appropriate, although “ad” would be acceptable (note: the FTC left the door open on the use of abbreviations if research can be produced demonstrating that a particular abbreviation or method is effective).
• If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.

WHAT ABOUT ENDORSEMENTS AND TESTIMONIALS?

In many instances, a person who receives an item for free must disclose that she received the item for free if she chooses to write about it.  Since 2009 (when the FTC came out with its updated Endorsement Guides) people have come up with various creative ways to make this disclosure, especially on space-constrained platforms.  Some of the creative ways of disclosure included the use of abbreviations or symbols that are supposed to disclose that a blogger received a free item, for example.  As is the case for use of “spon,” the FTC advises that abbreviations are not an acceptable form of meeting the disclosure requirements in the Endorsement Guides.    Likewise, using a symbol or abbreviation that links to an explanation is not an acceptable approach in and of itself for making necessary disclosures.   The FTC's position applies to celebrity endorsement disclosure requirements too.

As the FTC wades through the various reactions to the new guidance, we will update this post periodically with new thinking and new ways in which marketers are addressing the challenges and opportunities inherent in the FTC’s stated positions.