How to avoid misleading disclosures in online advertising

March 13th, 2013 by Barry Sookman Leave a reply »

Want to avoid making misleading disclosures in online advertising? Then the FTC’s new staff guidance document, .com Disclosures, How to Make effective Disclosures in Digital Advertising,  is a must read. It provides information businesses should consider as they develop ads for online media to ensure that they comply with US law.

The overview summarizes the general principles as follows:

  1. The same consumer protection laws that apply to commercial activities in other media apply online, including activities in the mobile marketplace. The FTC Act’s prohibition on “unfair or deceptive acts or practices” encompasses online advertising, marketing, and sales. In addition, many Commission rules and guides are not limited to any particular medium used to disseminate claims or advertising, and therefore, apply to the wide spectrum of online activities.
  2. When practical, advertisers should incorporate relevant limitations and qualifying information into the underlying claim, rather than having a separate disclosure qualifying the claim.
  3. Required disclosures must be clear and conspicuous. In evaluating whether a disclosure is likely to be clear and conspicuous, advertisers should consider its placement in the ad and its proximity to the relevant claim. The closer the disclosure is to the claim to which it relates, the better. Additional considerations include: 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 website; whether disclosures in audio messages are presented in 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.
  4. To make a disclosure clear and conspicuous, advertisers should:
    • Place the disclosure as close as possible to the triggering claim.
    • Take account of the various devices and platforms consumers may use to view advertising and any corresponding disclosure. If an ad is viewable on a particular device or platform, any necessary disclosures should be sufficient to prevent the ad from being misleading when viewed on that device or platform.
    • When a space-constrained ad requires a disclosure, incorporate the disclosure into the ad whenever possible. However, when it is not possible to make a disclosure in a space-constrained ad, it may, under some circumstances, be acceptable to make the disclosure clearly and conspicuously on the page to which the ad links.
    • When using a hyperlink to lead to a disclosure, make the link obvious;
  • label the hyperlink appropriately to convey the importance, nature, and relevance of the information it leads to;
  • use hyperlink styles consistently, so consumers know when a link is available;
  • place the hyperlink as close as possible to the relevant information it qualifies and make it noticeable;
  • take consumers directly to the disclosure on the click-through page;
  • assess the effectiveness of the hyperlink by monitoring click-through rates and other information about consumer use and make changes accordingly.
    • Preferably, design advertisements so that “scrolling” is not necessary in order to find a disclosure. When scrolling is necessary, use text or visual cues to encourage consumers to scroll to view the disclosure.
    • Keep abreast of empirical research about where consumers do and do not look on a screen.
    • Recognize and respond to any technological limitations or unique characteristics of a communication method when making disclosures.
    • Display disclosures before consumers make a decision to buy — e.g., before they “add to shopping cart.” Also recognize that disclosures may have to be
    • Repeated before purchase to ensure that they are adequately presented to consumers.
    • Repeat disclosures, as needed, on lengthy websites and in connection with repeated claims. Disclosures may also have to be repeated if consumers have multiple routes through a website.
    • If a product or service promoted online is intended to be (or can be) purchased from “brick and mortar” stores or from online retailers other than the advertiser itself, then any disclosure necessary to prevent deception or unfair injury should be presented in the ad itself — that is, before consumers head to a store or some other online retailer.
    • Necessary disclosures should not be relegated to “terms of use” and similar contractual agreements.
    • Prominently display disclosures so they are noticeable to consumers, and evaluate the size, color, and graphic treatment of the disclosure in relation to other parts of the webpage.
    • Review the entire ad to assess whether the disclosure is effective in light of other elements — text, graphics, hyperlinks, or sound— that might distract consumers’ attention from the disclosure.
    • Use audio disclosures when making audio claims, and present them in a volume and cadence so that consumers can hear and understand them.
    • Display visual disclosures for a duration sufficient for consumers to notice, read, and understand them.
    • Use plain language and syntax so that consumers understand the disclosures.

5.    If a disclosure is necessary to prevent an advertisement from being deceptive, unfair, or otherwise violative of a Commission rule, and it is not possible to make the disclosure clearly and conspicuously, then that ad should not be disseminated. This means that if a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.

Negative consumer experiences can result in lost consumer goodwill and erode consumer confidence.  Clear, conspicuous, and meaningful disclosures benefit advertisers and consumers.

For guidance on the Canadian rules, readers should review the Competition Bureau’s Enforcement Guidelines on  the Application of the Competition Act to Representations on the Internet. These guidelines do not yet reflect the CASL amendments to the Competition Act that will create prohibitions against making false or misleading representations in any of an electronic message’s sender description, subject matter field or message field, or in the URL or other locater in an electronic message. These provisions are not yet in force.

 

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