Federal Trade Commission Updates Online Advertising Disclosure Guidelines; Addresses Mobile Devices and Social Media

March 14, 2013

On March 12, 2013, the Federal Trade Commission (“FTC”) updated[1] its advertising disclosure guidelines for mobile and other online advertisers. The new guidance, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, explains how advertisers can make disclosures “clear and conspicuous” to avoid deceiving consumers. In particular, the guidance addresses the expanding use of mobile devices with small screens and the rise of social media marketing.  In this regard, the guidance includes a helpful appendix of twenty-two illustrative mock advertisements.

The guidance emphasizes that the consumer protection laws embodied in the FTC Act apply equally to advertisements across all media, whether those advertisements appear via desktop computer, mobile device, or more traditional media such as print, television, telephone, or radio.

Disclosures that are required to prevent an advertisement from being deceptive, unfair, or otherwise violative of an FTC rule must be presented “clearly and conspicuously.”  Thus, under the new guidance, advertisers must ensure that disclosures are clear and conspicuous across all devices and platforms that consumers may use to view a given advertisement.  If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, advertisers should avoid that platform when disseminating advertisements that require disclosures.

Whether a disclosure meets the clear and conspicuous standard is measured by the disclosure’s “performance–that is, how consumers actually perceive and understand the disclosure within the context of the entire ad.”  The guidance points to a number of factors in this regard. For example, advertisers should consider:

  • the placement of the disclosure in the advertisement and its proximity[2] to the claim it qualifies;
  • the prominence of the disclosure;
  • whether the disclosure is unavoidable;
  • the extent to which items in other parts of the advertisement might distract attention from the disclosure;
  • whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure;
  • whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration; and
  • whether the language of the disclosure is understandable to the intended audience.

The new guidance provides a number of warnings and recommendations for advertisers using space-constrained advertisements, such as those appearing on mobile devices with smaller screens and those appearing on social media platforms.  For example, where consumers must scroll in order to view a disclosure, the guidance suggests that advertisers “use text or visual cues to encourage consumers to scroll” to the disclosures.  In addition, the guidance provides a number of considerations for evaluating the effectiveness of using hyperlinks to provide consumers additional information where disclosures are too complex to describe adjacent to the “triggering” claim.  The guidance also suggests that advertisers avoid disclosing necessary information using pop-ups or Adobe Flash because consumer web browsers and mobile devices may be configured to block or otherwise cannot display such content.

Importantly, the guidance points out that “[d]isclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation.” Thus, “[w]hen a product advertised online can be purchased from brick-and-mortar stores or from online retailers other than the advertiser itself, necessary disclosures should be made in the ad.”  Advertisers may not rely on disclosures made by a third-party retailer that is promoted in the ad — even if the ad links directly to those disclosures on the third-party retailer’s website — because consumers may choose to purchase the product from a brick-and-mortar store or other unaffiliated online retailer.  In that case, consumers may not see the disclosures prior to making their purchases.  The same advice applies to “space-constrained ads,” including sponsored “tweets.”  The guidance further provides that “[i]f the disclosure needs to be in the ad itself but it does not fit, the ad should be modified so it does not require such a disclosure or, if that is not possible, the space-constrained ad should not be used.”

Gibson Dunn recommends that companies advertising online carefully review their policies and practices to ensure compliance with the updated FTC guidance.

   [1]   The FTC released its initial guidance, entitled Dot Com Disclosures: Information about Online Advertising, over a decade ago, in 2000.

   [2]   Although the 2000 guidance defined proximity as “near, and when possible, on the same screen,” and stated that advertisers should “draw attention to” disclosures, the new guidance states that disclosures should be “as close as possible” to the claim it qualifies.

Gibson Dunn’s Information Technology and Data Privacy Practice Group has counseled leading businesses across the country on a wide range of privacy and cybersecurity issues, including preventing, anticipating, and responding to security breach incidents, providing guidance on the legal implications of high-priority business actions, and representing clients in matters of privacy-related regulatory scrutiny, litigation, and law enforcement interest.  The Fashion, Retail and Consumer Products Practice Group includes a team of legal experts who focus on the complex and unique issues facing fashion designers, luxury goods companies, retail companies and manufacturing companies, including a broad range of corporate transactions, litigation, intellectual property, tax and real estate matters.

Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding these issues.  Please contact the Gibson Dunn lawyer with whom you work, or any of the following:

Information Technology and Data Privacy Practice Group: 
S. Ashlie Beringer – Palo Alto (650-849-5219, [email protected])
Howard S. Hogan – Washington, D.C. (202-887-3640, [email protected])
Karl G. Nelson – Dallas (214-698-3203, [email protected])
M. Sean Royall – Dallas (214-698-3256, [email protected])
Alexander H. Southwell – New York (212-351-3981, [email protected])
Debra Wong Yang – Los Angeles (213-229-7472, [email protected])
Scott H. Mellon – Dallas (214-698-3199, [email protected])

Fashion, Retail and Consumer Products Practice Group:
Lois F. Herzeca – New York (212-351-2688, [email protected])
David M. Wilf  – New York (212-351-4027, [email protected])

© 2013 Gibson, Dunn & Crutcher LLP

Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.