FTC Comes out Swinging Above the Fold. New Guidelines Hold Digital Advertisers’ Feet to the Fire.

Since its release in March, 2013, “.com Disclosures” is the new hot read among ad law geeks and insomniacs, but it should be on the desk of every mobile and digital marketing executive in America. The FTC is taking the hard line when it comes to disclosures on electronic and tiny screens, and failure to act could result in some one-on-one time with FTC.

Acknowledging digital advertising – particularly mobile advertising – often has space constraints, the FTC nevertheless is tightening the reigns on disclosures in them. Its new guidelines clearly suggest the FTC means to uphold the mandate of Section 5 of the FTC Act (the “Act”), regardless of the medium.

The new dot com guidelines are not a rewrite of the Act; the rules are the same. They are a clear acknowledgement, however, that digital advertising is not immune from the Act’s proscription on deceptive ads or practices, that digital advertising can be more deceptive than other forms of advertising, and that advertisers are going to have to take care not to ignore their obligations. Perhaps most importantly, the new guidelines serve as an advertising roadmap for how the FTC will review digital advertising pursuant to investigations relating to false advertising. As the advertising world balances space constraints and digital advantages of using certain media with its obligation to make disclosures and disclaimers clear and conspicuous, the new guidelines suggest the FTC is closely watching.

Online advertisers have long been engaged in the practice of placing disclosures and disclaimers below the initial window seen by a consumer, the area colloquially known as “below the fold.” While the new guidelines acknowledge practical considerations may require disclosures to be in inconvenient locations, it’s clear the FTC will be scrutinizing the distance between the claim and any disclaimer. Similarly, the FTC has taken into account flash technology, making clear it will examine whether other parts of an ad are designed to “distract attention for [from?] the disclosure,” even with the requisite information present.

The FTC understands the consuming public is no longer viewing digital content on the large screens on their desktops and laptops, but rather has migrated to handheld devices, such as tablets and smartphones. The guidelines make clear advertisers are required to consider the medium, eliminating an advertiser’s defense that its disclosure was present but designed for a bigger viewing screen.

When space constraints do not enable the advertiser to place the disclaimer or disclosure near the ad claim, the FTC will be looking for a conspicuous link in close proximity to the claim. The guidelines go on to identify that this link must convey the importance of the information contained in it, must be as close as possible to the relevant ad claim, and must be in a style that conveys it is an actual link to more information. In fact, the new guidelines specifically require that – no matter how it’s done – the disclosure must be displayed before the consumers makes a decision to buy. By example, it states “before they ‘add to shopping cart.’”

None of the foregoing should surprise advertisers, given the Act’s longstanding requirement that consumers have reasonable access to information they need to make an informed decision, but the FTC is going further, taking advantage of technology’s ability to provide advertisers with consumer behavior information: the guidelines require monitoring of any linked information to determine whether the placement is effective. We can infer from this new direction that the FTC’s tolerance for advertiser excuses is waning, and it will be looking to linked disclaimer feedback as a determinant of intent to deceive.

Closing the door on, “but judge, I had no choice but to leave out the disclaimer,” the new guidelines make clear that if an disclosure is needed to clarify the ad and it cannot be practically displayed, the ad should not run. Period.

The digital frontier is meeting the industrial age. Advertisers have long been able to take advantage of ambiguous loopholes as they related to the ad-technology space, but the door seems to be closing on defenses to misleading the public. Advertisers will continue to hawk their wares online, to be sure, but the arbitrage opportunity window is narrowing.



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