On March 12, 2013, the Federal Trade Commission released guidelines for “.com Disclosures”, updating a guidance document it previously issued in May 2000 that addressed the use of qualifying language and other disclosures in digital advertising. The new guidelines recognize that “dramatic changes” have taken place in online advertising over the past decade, particularly in the context of “space constrained screens” of mobile devices and in flourishing social media platforms such as Twitter, which provide limited room for the disclosure of information necessary to ensure that advertising claims are truthful. The types of information that might need to be disclosed in conjunction with an advertising claim in digital media include such statements as “sponsored ad,” “monthly service fee required” or “typical results may be less than advertised.” A copy of the .com Disclosures can be found here.

The March 2013 guidelines reiterate the general regulatory requirement that relevant limitations and qualifying information in advertising must be “clear and conspicuous” regardless of the media in which the ad is displayed. Nevertheless, the FTC acknowledges that special issues may arise when ads appear in mobile applications for smart phones or in social media. The fifty-three page guide provides detailed explanations and 22 illuminating examples as to what “clear and conspicuous” means when space is limited. The examples explore ads in the context of differing electronic devices that may vary the visual display of an ad, social media platforms, and websites where the consumer is offered the opportunity to purchase the advertised product or service. While the FTC offers many useful do’s and don’ts, it also warns advertisers that “if a particular platform does not provide an opportunity to make clear and conspicuous disclosures, that platform should not be used to disseminate advertisements that require disclosures.” Alternatively, the claims “should be modified so that the disclosure is not necessary.”

The Three P’s: Proximity, Placement and Prominence

The March 2013 Guidelines advise that in evaluating whether required disclosures in digital advertising are sufficiently “clear and conspicuous”, the advertiser should consider three interrelated factors: (1) the proximity of the disclosure to the relevant claim; (2) the placement of the disclosure within the ad; and (3) the visual or graphic prominence of the disclosure.

Proximity: The Closer the Better

The FTC advises that disclosures should appear “as close as possible to the triggering claim” to increase the likelihood that the consumer will see the disclosure and relate it to the claim. Ideally, this means on the same screen or with a clear indication that a consumer may have to scroll down or click through to a website. In general, advertisers should avoid interposing text and graphic elements between an ad claim and relevant qualifying information.

In the following example provided by the FTC, the required disclosure regarding the approximate carat weight is not adequate. The disclosure is not close enough to the description of the product and consumers are unlikely to see it because it appears too far down the page, where consumers are unlikely to scroll.

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Placement: In a Good Place

The placement of disclosure information goes beyond just the “proximity” factor of how close the disclosure is to the claim it modifies, addressing where the disclosure material should be located within the advertisement. According to the FTC, advertisers should ensure that the disclosures are seen by consumers before they make a decision to buy or add an item to a “shopping cart” but that does not mean that advertisers should only focus on the order screen. As the agency comments in the guidelines, “consumers may not relate a disclosure on the order screen to information they viewed much earlier.”

Hyperlinks

Disclosures through the use of hyperlinks, while sometimes acceptable, can be tricky. First, the FTC warns that cost information or health and safety disclosures are not the proper subjects for hyperlinked disclosures. Additional details about extra fees can, however, be disclosed through a hyperlinked disclosure. Such a disclosure must be readily accessible, be labeled in an obvious way and convey the importance of the information found at the link.

The example below shows an acceptable hyperlinked disclosure directly underneath the claim “Satisfaction Guaranteed.” That is, “restocking fees apply to all returns.”

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Prominence: Don’t Play Hide and Seek

Disclosures must be sufficiently prominent to be noticeable to consumers because, as the FTC notes, “size matters.” Color and graphic elements are also important factors. Disclosures that are at least as large as the ad claim are more likely to be effective, and advertisers should also consider using contrasting colors and graphic design elements to help make disclosures more apparent to consumers. Advertisers are also warned about “burying” the disclosures in long paragraphs of unrelated text or in “terms of use” that the typical consumer may gloss over. As the FTC emphasizes, advertisers may have an obligation to draw attention to disclosures that consumers may not necessarily be expecting. Compare the following two examples from Twitter. The first one indicates it is an “Ad” right up front, but consumers may not understand that “#Spon” at the end of the second tweet is meant to disclose that JuliStarz is advertising for Fat-away Pills. The hash tag is also difficult to see because it appears after a link.

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Optimize Your Pages (and Disclosures) for Mobile Devices

Advertisers are responsible for ensuring that consumers are able to see disclosures across different types of viewing devices from wide-screen monitors on desktop computers to substantially smaller screens on smartphones. In more than one instance, the FTC notes that advertisers can minimize or even eliminate certain prominence issues related to smartphones by offering a mobile-optimized version of their website. Disclosures that are too small to be read on a smartphone screen cannot by definition be “clear and conspicuous.” The FTC also warns that when the disclosure text does not wrap around to the next line and a consumer must scroll left and right to read it, the disclosure is unlikely to be acceptable. Advertisers also need to be cautious of the technological limitations of mobile devices. For example, disclosures that are visible because of Adobe Flash website components or “mouse-over” technology are unlikely to be seen by mobile users. Similarly, FTC also warns against the use pop-ups for disclosures because many consumers use pop-up blockers.

Don’t Distract, But Do Repeat When Necessary

Advertisers are advised to review an entire ad to ensure that text, graphics, hyperlinks, flashing images or sound are not distracting consumers away from paying attention to required disclosures. And if a website is lengthy, or there are multiple routes within a website to get to the place where an advertising claim appears, disclosures may need to be repeated to be deemed “clear and conspicuous.” The recommendation to repeat disclosures also applies where the claim itself is repeated in different places in a website.

Conclusion

The FTC’s update to the .com Disclosure guidelines strives to provide guidance to advertisers operating in the modern digital world, with many helpful illustrative examples. While many specific questions are left unanswered because technology and social media are advancing forward all the time, it is important to bear in mind the overarching standard of truthful advertising enforced by the FTC that ad claims, regardless of the media used, must not be false or misleading through the omission or lack of prominence of material qualifying information.