FTC Issues New Rules for Digital Advertising

Advertisers now have a new set of standards for making disclosures in digital advertising, courtesy of the FTC. Last month, the FTC released its revised “.Com Disclosures: How to Make Effective Disclosures in Digital Advertising.” Asserting that advertisers need to make their disclosures clearly so that consumers understand their offers, the FTC  decries hyperlinks, hashtags, and pop-ups. Regardless of the space-constraints of mobile space, banner ads, tweets, advertisers must make clear and conspicuous disclosures to avoid complaints of deceptive advertising. Below is a list of do’s and don’t’s for disclosures based on the new FTC guides.

Do’s:

• Create flexible advertising designs that are appropriate for each platform.
• Optimize advertising so that disclosures are “unavoidable”, regardless of the device or platform, particularly mobile devices.
• Consider proximity in determining whether a disclosure has been made clearly and conspicuously.
• Label hyperlinks in an  “obvious” manner that emphasize their importance and place them right next to the claim.
• Communicate all disclosure information within a single tweet or post.
• Design social media advertising for republication so that consumers do not accidentally truncate the disclosures.
• Make disclosures in clear, succinct, and easy to understand transparent language.
• Make all disclosures and conspicuously prior to a consumer adding any good or service to his shopping cart.
• Engage in “reasonable monitoring” of the marketplace to ensure that consumers see and understand disclosures.

Don’ts:

• Don’t run advertising that requires complex disclosures that cannot be made clearly and conspicuously in space-constrained advertising.
• Avoid any advertising design that has excess blank space, requires scrolling in any direction, or clicking through to multiple screens, particularly on mobile devices.
• Do not rely on generic link shorteners, or vague hashtags (e.g. #SPON for sponsored), particularly for compliance with the FTC’s Endorsement and Testimonial Guidelines. (For more discussion of those guidelines, click here.)
• Beware of distracting elements that interfere with the disclosures’ visibility.
• Do not rely on sending consumers from social media to a website if goods may be purchased at bricks and mortar locations.
• Do not use pop-ups to make disclosures.
• Avoid prechecked boxes to obtain affirmative consent from the consumer.

The FTC guides clearly state that technological limitations are not a defense to false or deceptive advertising charges. Even as new, smaller technologies appear, (e.g. smartwatches), the FTC will continue to hold advertisers to these standards. If digital advertisers find compliance difficult because of the complexity of the goods or services or space constraints, the FTC offers succinct advice: don’t run the advertising.

The FTC’s ultimate test of compliance is whether the “information intended to be disclosed is actually conveyed to consumers.” Undoubtedly, the FTC will start enforcing its new guidelines within the year. All advertisers should  audit their advertising with legal counsel. The audit should determine the necessary disclosures, examine current disclosure strategies, and analyze changes needed to minimize risk and enhance the brand’s reputation for truthful advertising.

Copyright 2013 Kyle-Beth Hilfer, P.C.