FTC Releases “.com Disclosures: How to Make Effective Disclosures in Digital Advertising”

The FTC’s guidance for digital (online) advertising applies to all business advertising on websites, mobile phone applications, or anywhere online (i.e., including on Facebook, smartphones, etc.).

The FTC guidance on online advertising notes that “cyberspace is not without boundaries, and deception is unlawful no matter what the medium. THE FTC has endorsed and will continue enforcing its consumer protection laws to ensure that products and services are described truthfully online…..”

The FTC guidance notes that advertising online, just like advertising in print media, must not be deceptive. Qualifying disclosures must be clear and conspicuous, and should be incorporated into the underlying claim, rather than being in a separate disclosure.

In determining whether an online disclosure is clear and conspicuous, the FTC will look to factors such as:

• Proximity of the disclosure to the claim (and placement of the disclosure)
• Prominence of the disclosure, and whether unavoidable
• Presence of distracting elements
• Need for repetition in different places on the websites
• Whether the language is understandable for the intended audience
• Whether disclosures in audio and visual messages, respectively, are adequate

The FTC gives considerable guidance about the placement for qualifying disclosures. For example:

• The disclosure should fit the platform (for example, if on a mobile platform, the ad should fit and be readable).

• The disclosure also should be close to the claim it qualifies. If the advertiser uses hyperlinks, these should be clearly labeled—but if necessary, the advertiser should not rely on hyperlinks, but rather should place qualifying disclosures in the same area as the ad itself.
• Ideally, the consumer should have to scroll, but if scrolling is necessary, there should be visual cues to prompt consumers accordingly

• Businesses should review Web traffic data to check if disclosures are in fact being read.

Among other things, the FTC online advertising guidance addresses Twitter tweets.

The FTC guidance regarding testimonials and endorsements applies to this context, too.

For instance, a celebrity endorsement to a product, with a hyperlink to a disclaimer, is insufficient; rather, the celebrity’s relationship to the endorsed product must be disclosed. (The guidance specifically addresses rules for “when using a hyperlink to lead to a disclosure”—for example, the link must be “obvious”).

The celebrity should disclose whether he or she is getting paid to endorse the product.

Further, the celebrity must follow all the requirements set forth by the FTC in its Endorsement and Testimonial Guide.

In a nutshell, the FTC Act prohibits “unfair or deceptive acts or practices;” this “broadly covers all advertising claims, marketing and promotions activities, and sales practices in general.” This includes online, as well as print, television, telephone, and radio.

The guidance contains a generous appendix with examples. For instance:

• Example 1: “imitation” needs to accompany the term “pearl.”
• Examples 2, 7, 9: an ad must disclose that diamond weights are not equal
• Example 3: a monthly service fee for cameras used to monitor homes, over the Web, must be clearly and conspicuously disclosed
• Example 4: a disclaimer regarding perishable food belongs in the body of the ad, not via hyperlink
• Example 5: additional fees should be disclosed in the main ad, not via hyperlink
• Examples 6, 8: restocking feees should be disclosed in the body
• ….

One of the examples involves a weight loss claim (example 15). The “space-constrained message” requires two disclosures: (1) that endorser is paid, an d(2) the amount of weight consumers who use the product can generally expect to lose is much less than the 30 pounds the paid endorser says she lost in 6 weeks. Specifically, it should disclose the typical weight loss of 1 lb/wk.

Example 1 involves a blogger who must disclose clearly and conspicuously (ie up front) that she obtained the product for free.

The Cohen Healthcare Law Group represents clients who need FTC compliance review of their website and marketing materials to ensure that they are not engaged in false, deceptive and misleading advertising. Contact our FTC legal team today.