Speaking at the National Advertising Division's annual conference, Federal Trade Commissioner Julie Brill urged attendees to protect consumer privacy and keep their ads truthful, even in the face of rapid technological advancement.
Brill discussed three areas of special interest to the agency, while recognizing the impact that "the swirling cyber-atmosphere" has on endorsement disclosures, data use and disclosures in ad tech, and health claims for mobile apps, dietary supplements, and other products and services.
Endorsement and testimonial disclosures remain essential in new media, Brill emphasized, particularly since statistics show that 60 percent of consumers read online reviews before making a purchase. "[E]ven in the face of new challenges and new technologies, our fundamental goal is to make sure that consumers have the information they need to make meaningful choices," she explained. Referencing FTC actions taken against companies that failed to disclose positive reviews were paid for or posted by employees, "that means that consumers ought to know about connections between endorsers and advertisers," she said.
"[A]t the FTC, we are concerned that an aura of authenticity can shield reviews that deceive rather than inform consumers," she said. "[E]ven in the age of YouTube, Twitter, and other people-powered social media platforms, fundamental disclosure principles still apply. Endorsements must be truthful and not misleading. If there is a connection between an endorser and an advertiser that would affect how consumers evaluate the review, that connection must be clearly and conspicuously disclosed."
Turning to data collection and use, Brill recognized that advertising "has become one of the most technologically advanced and data driven industries in our economy." Targeted advertising can be beneficial for business in general and consumers in particular, she recognized, "[b]ut how much data is collected about consumers, how it is stored, and how it is used, raise significant privacy concerns."
Companies should communicate with and provide choices to consumers about data collection and use, Brill told the NAD conference attendees, adding that "self-regulation needs to keep up with the times: after all these years, consumers still don't understand what's happening with their personal information, and they continue to struggle to control targeted advertising and data collection."
Brill also referenced consumer demand for ad-blocking technology, and urged "the industry to create robust and innovative tools to address this demand in a sophisticated way. Not to find ways around consumer choice, but to provide consumers with something they clearly want: to see advertising that respects their privacy and that they can trust."
She also cautioned advertisers that the FTC is keeping close tabs on online medical health and diagnosis issues. Health claims on mobile apps and dietary supplements have been the subject of multiple enforcement actions recently, Brill noted, and she mentioned, as examples, the app that promised to detect symptoms of melanoma from pictures of users' moles, and the children's computer game that touted its ability to improve memory, focus, and school performance.
She also recalled the D.C. Circuit Court of Appeal's decision earlier this year in the FTC's lawsuit against POM Wonderful. While the court did not uphold the agency's requirement for two randomized and controlled human clinical trials for future disease claims, the court did affirm the FTC's order requiring POM to have at least one such study before making disease prevention or treatment claims, and said that two trials might be warranted in other cases, depending on the facts.
To read Commissioner Brill's speech, click here.
Why it matters: The overarching message from Commissioner Brill's remarks: Even as the world of advertising changes, the FTC will stay its course, albeit tweaking and tailoring its guidance in a new era of connectivity. "Yes, the explosion of social media, connected devices, mobile apps, data, and methods of data analyses have wrought benefits and threats to consumers unimaginable even three years ago," she told attendees. "But the principles of truth in advertising, consumer control over their data, and privacy protection behind which the FTC has always stood can and do still apply. In these times, hanging on to what has served us so well in the past is perhaps the best way to ensure we can adequately protect consumers in what will certainly continue to be a challenging future."