Thirteen years after the Federal Trade Commission first offered guidance to online marketers, the agency has updated its "Dot Com Disclosures" for the age of digital advertising to address the advertising claims made on smartphones and on social media sites.

The new FTC staff guidance, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, sets forth some “clear and conspicuous” disclosures advertisers should make to avoid consumer confusion and deception in the marketplace. The agency has been working to update the guidance since May 2011. Before releasing the long-awaited changes, the FTC conducted three public comment periods and hosted a day-long public workshop.

Most importantly, the updated guidance emphasizes that existing consumer protection laws apply with equal force to the Internet and other electronic media. In practical terms, that means that if a disclosure is necessary and doesn’t fit on an iPhone screen or within the 140-character limit of Twitter, then an ad claim should be modified or not disseminated. “Moreover, if a particular platform does not provide an opportunity to make clear and conspicuous disclosures, it should not be used to disseminate advertisements that require such disclosures.”

The new guidance updates the 2000 edition with 22 advertising examples and addresses new issues for marketers. Some of its key topics include:

Proximity.  In the prior version of the guidance, marketers were advised to place disclosures “near, and when possible, on the same screen.” Now, under the updated guidance, disclosures should be “as close as possible” to the relevant claim. “The closer the disclosure is to the claim to which it relates, the better,” the FTC said. Consideration should also be given to issues like the prominence of the disclosure; whether it is unavoidable; whether other parts of the ad distract attention from the disclosure; whether the disclosure needs to be repeated at different places on a Web site; whether disclosures in audio messages are presented at an adequate volume and cadence; whether visual disclosures appear for a sufficient duration; and whether the language of the disclosure is understandable to the intended audience.

Hyperlinks.  Advertisers should avoid the use of hyperlinks to make disclosures about a product’s cost or certain health and safety issues. If hyperlinks are used, advertisers should consider their functionality on a variety of platforms and devices to ensure that consumers can access the disclosure. They should also use consistent styles to increase the likelihood that consumers will understand that a link is available. Hyperlinks should also be labeled as specifically as possible (buried or generically labeled links are not recommended) and placed as close to the relevant information as possible. “The link should give consumers a reason to click on it,” the FTC explained, and should take consumers directly to the disclosure on the click-through page. The agency also advised advertisers to assess the effectiveness of hyperlinks by monitoring click-through rates and make changes as necessary. 

Pop-ups.  The agency frowned on pop-ups as a method of disclosure, as they are often blocked and prevent consumers from seeing the necessary disclosure. Even unblockable pop-ups may fail to be effective because consumers do not associate information in a pop-up window with a claim or product. Advertisers who use pop-ups can reduce problems by requiring that consumers take an affirmative action to proceed past the pop-up before moving on (like clicking on a “yes” or “no” button without the use of a preselected button).

Scrolling.  Advertisements should be designed for the relevant medium so that “scrolling” down a screen is not necessary to find disclosures. In situations where scrolling is necessary, the FTC suggested that advertisers use text or visual cues to encourage consumers to read the disclosure (however, scroll bars are “not a sufficiently effective visual cue”). “Advertisers should keep in mind that having to scroll increases the risk that consumers will miss a disclosure,” the agency cautioned.

Display.  “[I]t is important for advertisers to draw attention to the disclosure,” the guidance noted. “Consumers may not be looking for – or expecting to find – disclosures.” Disclosures should be made before the consumer purchases an item and should be prominently displayed so that they are noticeable to consumers. The size, color, and graphic treatment of a disclosure in relation to other parts of a Web site, e-mail, text message, or application should be considered. And disclosures should not be relegated to “terms of use.” “Simply making the disclosure available somewhere in the ad, where some consumers might find it, does not meet the clear and conspicuous standard,” the FTC said.

Size and space.  The FTC notes that mobile screens and social media platforms offer advertisers limited space within which to promote their goods and services and display needed disclosures. However, when dealing with space constraints, some short-form disclosures may suffice. For example, the word “Sponsored” or “Ad” at the beginning of a Tweet or other short message should convey to consumers that they are viewing an advertisement. Disclosures should also appear in each and every ad that would require a disclosure if that ad were viewed in isolation, the FTC said. “Do not assume that consumers will see and associate multiple space-constrained advertisements,” it says in the guidance. A series of Tweets, for example, should all include “Ad” or a similar disclosure.

In addition to providing guidance for advertisers, the FTC also places certain affirmative obligations on sellers to ensure their disclosures are accessible to consumers. For example, the guidance suggests that online sellers optimize their Web sites for mobile devices so that important information is displayed to and not missed by consumers. Further, if a Web site operator relies on “mouse-over” technology to display certain disclosures on a Web page, this technology may not be accessible or effective on a mobile device where there is no cursor to hover over a link. Last, the guidance suggests that advertisers assess the effectiveness of hyperlinked disclosures by using tools to monitor click through rates from ads to the disclosures. “If the hyperlinks are not followed,” the guidance states, “another method of conveying the required information may be necessary.”

To read the FTC’s guidance, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, click here.

Why it matters: Advertisers should familiarize themselves with the updates and evaluate their claims under the guidelines, particularly with regard to ads on mobile sites and social media sites. As the agency emphasized in the guidance, “deception is unlawful no matter what the medium.” The FTC also noted that the guidance is not intended to provide a safe harbor from potential liability. “Whether a particular ad is deceptive, unfair, or otherwise violative of a Commission rule will depend on the specific facts at hand,” the agency said. “The ultimate test is not the size of the font or the location of the disclosure, although they are important considerations; the ultimate test is whether the information intended to be disclosed is actually conveyed to consumers.”