Avoiding Deceptive Advertising in the Digital Age

Does the medium matter? According to the U.S. Federal Trade Commission’s recent publication, “.com Disclosures, How to Make Effective Disclosures in Digital Advertising”, consumer protection laws apply equally to all forms of media and devices, including smartphones, tablets, Facebook, Twitter and the internet. The new FTC guidance, released on March 12, 2013, is an update to the FTC’s 2000 publication, “Dot Com Disclosures”.

As a general rule, the FTC requires that an advertiser provide additional information when an ad makes a claim, express or implied, that might be misleading without more information. To be effective, that additional information must be presented in a way that is clear and conspicuous.

Advertisers looking for similar guidance on Canadian law should review the Competition Bureau’s “Enforcement Guidelines on the Application of the Competition Act to Representations on the Internet”, which was last updated in 2009.

Clear and Conspicuous

For disclosure to be effective, it must be clear and conspicuous to the reasonable consumer regardless of the device, media or platform.

Ensuring that a consumer sees the disclosure is the responsibility of the advertiser. The FTC gives substantial guidance on the placement of disclosure, in particular in regards to the proximity of the disclosure to the claim that requires the disclosure. In general, the closer the disclosure is placed to the claim it is modifying, the better.

The FTC states that disclosure is most effective when the claim and the disclosure are on the same screen. When the screen is small or the disclosure is long, an advertiser should include a prompt that encourages the viewer to scroll through all of the relevant information. Prompts should be specific, i.e. “see below for important information on restocking fees” is better than “details below”.

Next week, we will publish additional tips on ensuring your disclosure is clear and conspicuous in “Part 2: Tips for Business Advertising Online in the U.S.”

Limited Space

When space is at a premium, in banner ads or on Twitter, for example, the advertiser must consider whether to place the disclosure in the ad itself or to hyperlink to the disclosure. Although the FTC frowns on the use of hyperlinks, they may be used as long as the disclosure doesn’t address key information, such as price, health and safety.

When hyperlinks are used, the link should be close to the relevant information and be obvious to the viewer. The hyperlink should provide sufficient details about the nature of the disclosure, and once a viewer clicks on the hyperlink they should be taken immediately to the page that contains the disclosure, which should be noticeable and understandable.

The FTC particularly discourages disclosure in the form of pop-up ads, because consumers often block pop-ups, or fail to make the association between the advertisement on one screen and potentially relevant information in the pop-up. Where pop-ups are used, they should require the consumer to complete an affirmative action before closing the pop-up window (i.e. clicking “yes” or “no”).

Endorsements

Bloggers or Twitter users who are paid to endorse products, or who receive free products for review purposes, need to disclose their relationship with the company. For example, a paid celebrity endorsement on Twitter should start with “Ad:”, followed by the advertiser’s message. Disclosure may not be effective if it follows in a subsequent tweet, as unrelated messages may be posted in the interim, and separate the claim from the disclosure. Additional information on disclosure rules for celebrity endorsers, bloggers and testimonial advertisments can be found in the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising

The FTC publication is clear that if an advertisement requires disclosure to prevent it from being deceptive, but the necessary disclosure cannot be made clearly and conspicuously, the advertisement should not be run.