In response to requests from industry and consumer organizations to update its 2002 search engine advertising guidance, the Federal Trade Commission (“FTC”) has issued explanatory warning letters to 24 prominent search engine companies, including Google, Yahoo!, Bing and AOL.

Content of FTC Warning Letters

The letters serve as an attempt to educate search engine companies and remind them that they must clearly distinguish paid search results that appear on the top of the web page from those that are a natural result of the consumer’s search terms (organic results). The letters also serve as warning to search engine companies, detailing the fact that in recent years, the FTC has noticed a significant downturn in compliance, resulting in paid search results becoming almost indistinguishable from organic search results. The letters make clear that the increasing potential for consumers to be deceived by paid advertising search results may be a violation of the FTC Act.

Result of FTC Warning Letters

To avoid FTC investigation and regulatory penalties, search engine companies should pay heed to the warning letters and ensure that the distinction between paid advertisements and organic search engine results are clear to consumers. The FTC recommends using every resource available to make the distinction noticeable and understandable to consumers, including unique visual cues such as a different background color or prominent border, altered text fonts or size, labels that are noticeable and that unambiguously convey if a search result is advertising, and other suitable techniques.

The search engine advertising letters are the latest attempt by the FTC to forewarn companies of potential violations. Warning letters have also been issued to Internet and mobile operators regarding COPPA amendments and recent updates to the Dot Com Disclosures and Endorsements and Testimonials Guides.