In a world without walls, recent advancements in web and mobile technology allow consumers, entrepreneurs and advertisers to connect anywhere at anytime. With minimal to no friction in e-commerce transactions (e.g. one-click payment systems), goods and services are increasingly being sold by individuals, sometimes referred to as prosumers. From a regulatory and legal perspective, this creates a highly decentralized regulatory environment that places greater responsabilities on us. Worded differently, the effectiveness of certain laws and regulations have become more dependent on our individual willingness to comply.
Cognizant of these new market realities, the U.S. Federal Trade Commission recently released a relatively lengthy publication on how to make effectice .com advertisements and disclosures. The FTC’s recommendations should be considered important to all who are concerned about maintaining a marketplace free of deception and unfair practices. For entrepreneurs and businesses, complying with fair advertising practices is a matter of whether you are seeking: (a) i. short-term profits; ii. deceived, one-time customers; iii. little to no long-term business growth; or (b) i. happy, revenue generating, repeat customers; and long-term, steady business growth.
Notwithstanding these and many other advantages in complying with fair advertising practices, another plain advantage is avoiding regulatoring fines and/or investigations. The FTC, like many other national authorities, has made it clear that it has and will continue to enforce its consumer protection laws to ensure that products and services are described truthfully online, and that consumers understand what they are paying for.
For convenience purposes, the following points describe the information businesses advertising products or services in the U.S. should consider as they develop ads for online media to ensure that they comply with the law. Unfair or deceptive acts or practices encompasses online advertising, marketing, and sales, and are not limited to any particular medium used to disseminate claims or advertising. Therefore, the following points apply to the wide spectrum of online activities. Finally, the points are as valid for written adds as they are for visual or audio adds. Briefly,
1. When practical, advertisers should incorporate relevant limitations and qualifying information directly into the underlying claim, rather than having a separate disclosure qualifying the claim.
2. 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:
a. the prominence of the disclosure;
b. whether it is unavoidable;
c. whether other parts of the ad distract attention from the disclosure
d. whether the disclosure needs to be repeated at different places on a website;
e. whether disclosures in audio messages are presented in an adequate volume and cadence;
f. whether visual disclosure appear for a sufficient duration; and whether the language of the disclosure is understandable to the intended audience.
3. To make a disclosure clear and conspicuous, advertisers should:
a. Place the disclosure as close as possible to the triggering claim.
b. 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.
c. 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.
d. When using a hyperlink to lead to a disclosure,
i. make the link obvious;
ii. label the hyperlink appropriately to convey the importance, nature, and relevance of the information it leads to;
iii. use hyperlink styles consistently, so consumers know when a link is available;
iv. place the hyperlink as close as possible to the relevant information it qualifies and make it noticeable;
v. take consumers directly to the disclosure on the click-through page;
vi. assess the effectiveness of the hyperlink by monitoring click-through rates and other information about consumer use and make changes accordingly.
e. 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.
f. Keep abreast of empirical research about where consumers do and do not look on a screen.
g. Recognize and respond to any technological limitations or unique characteristics of a communication method when making disclosures.
h. Display disclosures before consumers make a decision to buy — e.g., before they “add to shopping cart.” Also recognize that disclosures may have to b repeated before purchase to ensure that they are adequately presented to consumers.
i. 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.
j. 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.
k. Necessary disclosures should not be relegated to “terms of use” and similar contractual agreements.
l. 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.
m. 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.
n. Use audio disclosures when making audio claims, and present them in a volume and cadence so that consumers can hear and understand them.
o. Display visual disclosures for a duration sufficient for consumers to notice, read, and understand them.
p. Use plain language and syntax so that consumers understand the disclosures.
Finally, 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.
