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March 13, 2013

FTC Toughens Stance on Online Marketing

New Guidelines Require ‘Clear and Conspicuous’ Disclosures

The Federal Trade Commission (FTC) is laying down the law — full disclosure is now a requirement for all online ads, even those that pop up on Facebook or Twitter.

The FTC has released new guidance for mobile and other online advertisers requiring “clear and conspicuous” disclosures for all products “to avoid deception.”

The new guideline updates those put in place by the FTC in 2000, well before Smartphones and tablets became popular. The guideline — .com Disclosures: How to Make Effective Disclosures in Digital Advertisingcontains mock ads that illustrate the updated principles. It also emphasizes consumer protection laws apply equally to marketers across all mediums: television, radio, printed material, desktop computers, laptops, tablets and Smartphones.

Disclosures about product claims must be “as close as possible” to the relevant claim, the FTC said, even on Smartphones with small screens.

“The new guidance points out that advertisers using space-constrained ads, such as on some social media platforms, must still provide disclosures necessary to prevent an ad from being deceptive, and it advises marketers to avoid conveying such disclosures through pop-ups, because they are often blocked,” The FTC said.

Marketers are also asked to avoid using hyperlinks for disclosures that involve product cost or certain health and safety issues.

The breakdown

When it comes to online ads, the FTC said the basic principles of advertising law apply. They are:

1. Advertising must be truthful and not misleading;

2. Advertisers must have evidence to back up their claims (substantiation);

3. Advertisements cannot be unfair.

“If an ad makes express or implied claims that are likely to be misleading without certain qualifying information, the information must be disclosed,” The FTC said. “Advertisers must determine which claims might need qualification and what information should be provided in a disclosure. If qualifying information is necessary to prevent an ad from being misleading, advertisers must present the information clearly and conspicuously.”

For instance, a celebrity, ‘Monica Major’ is hired to endorse a new diet pill.

Monica tweets: I had to lose 40 pounds in two months for my new movie. Thanks Belly Buster Bullets for making it possible.

According to the FTC, this is false advertising and requires a disclosure.

Here is a corrected version: I had to lose 40 pounds in two months for my new movie. Thanks Belly Buster Bullets for making it possible. Typical result — one to two pounds a week.

To evaluate if a particular disclosure is clear and conspicuous, the FTC asks marketers to consider the following:

• The placement of the disclosure in an advertisement and its proximity to the claim it is qualifying,

• The prominence of the disclosure,

• Whether items in other parts of the advertisement distract attention from the disclosure,

• Whether the advertisement is so lengthy that the disclosure needs to be repeated,

• Whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration,

• Whether the language of the disclosure is understandable to the intended.