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FTC Disclosure and Online Marketing

On March 12, 2013, the United States Federal Trade Commission (FTC) released the long-awaited Dot Com Disclosures. The FTC Dot Com Disclosures guide provides guidance for online and mobile advertisers. Last released in 2000, the internet back then looked very different than it does today. Even now, after over a year of working on this update, some of the information related to FTC Disclosure seems dated because technology is changing so quickly.

As soon as the guide was released I started getting emails and contacts asking questions and seeking clarification. The amount of inaccurate information I’ve seen in the few days after their release tells me that there is a need for helpful and accurate information for business, social media professionals and bloggers when it comes to the 2013 FTC’s Disclosures for Dot Com (and other domain endings) businesses.

1. These disclosures are NOT new laws. The 2013 Dot Com Disclosures, like its predecessor, is a guidance document. The FTC staff has made these documents public to assist businesses and professionals working in the online and mobile advertising space in creating their advertising programs so they comply with the FTC rules with regard to advertising and selling online and via mobile platforms. The guidelines only address disclosures required that relate to laws the FTC enforces.

2. The FTC Act continues to prohibit “unfair or deceptive acts or practices” with regard marketing, advertising, promotional and sales practices, in general. The FTC Act is platform neutral, with the goal of consumer protection being paramount. As new technologies and methods of engaging with consumers have come about, the requirement for appropriate disclosures has continued. This document seeks to clarify what is meant by “clear and conspicuous” disclosure to consumers.

3. The FTC’s basic principles of advertising law have not changed. Advertising must still be fair, truthful and not misleading, and have evidence to support all claims. The FTC is tasked with protecting consumers, and, as such, their evaluation of advertising uses the reasonable consumer as its standard.

4. These disclosures, both the content and their placement, aren’t measured by what the company or online marketer/professional thinks makes sense. If a disclosure is necessary or required so that an advertisement or marketing message does not violate an FTC rule or other law, then the disclosure should be clear and conspicuous. The guide provides a very good discussion of this topic. Mentioned are factors such as size of text, color, distracting factors, use of graphics, repetition, location, proximity to message, as well as the primary message of the advertisement.

5. Hyperlinks may be used for disclosures, but the FTC will look at a number of factors to determine if they meet the clear and conspicuous test. The FTC Disclosure guide provides a comprehensive discussion on this topic on pages 10 – 13. The general conclusion is that if you are going to use a hyperlinked disclosure you should read this section to fully understand how to do it within the parameters of compliance.

6. Understand the technical limitations of the platform. The FTC is very clear that pop-up disclosures are not to be used. Due to pop-up blockers, a user or consumer may not see the required disclosure creating a potential liability for the marketer. In addition, be aware of the issues related to the technology that may prevent the disclosure from being seen. Not all apps, browsers or mobile platforms function in the same way. What may work on one device may not work on all. In addition, common software may prevent hover disclosures or change link functionality. If these are known (or should be known) limitations, be prepared to create alternative means of disclosure.

7. For the first time, the FTC addresses disclosure on space-constrained platforms. For most, this means Twitter. The FTC states the disclosure should be at the beginning, using “AD” or “Sponsored” so the consumer is adequately informed. The FTC notes that using an abbreviation of the word “sponsored” is likely inadequate because the consumer will not know what the abbreviation means. While most advertisements or sales pitches are teasers and will lead the consumer to a site where it is much easier to provide full and appropriate disclosure, the space-constrained message may still need a disclosure.Furthermore, the FTC recognizes that space-constrained messages may be replicated (such as a retweet). With such replication, the advertiser needs to ensure there is sufficient space so the disclosure is maintained.

FTC-Dot-Com-Disclosure-For-Twitter

8. Since the FTC is primarily tasked with protecting consumers, it makes sense that the Dot Com Disclosures address the language used for the disclosure. Consumers have different levels of understanding. Online professionals may be very proficient at the utilized technology, but the consumer may not. How you use the technology may differ from how the consumer uses it, making it incumbent on the marketer and other online professions creating the message to craft a disclosure appropriate for the average consumer.

9. The Dot Com Disclosures do not change any of the requirements with regard to testimonials and endorsements used in advertising. When companies use third parties to share their message, through testimonials or endorsements, the FTC’s Endorsement Guides offer helpful information. The Dot Com Disclosures not only addresses additional situations with regard to marketing, sales and advertising in the mobile and online space, but it acts to clarify they types of disclosures that are required when the internet or mobile platforms are used. The disclosure requirement for bloggers, spokespeople, brand ambassadors, and other third-parties (like celebrities) remain the same.

While this update to the Dot Com Disclosures now incorporates technology that did not exit when the prior version was created, we don’t see many radical changes. These disclosures relate to online and mobile-technology communication with consumers that could lead to a buying decision. And while much of the focus is on the consumer protection aspect of these new Dot Com Disclosures, what is equally important is that compliance is also a tool which allows marketers and sellers to compete in a marketplace free of deception or unfair trade practices.

Who should use the Dot Com Disclosures? This guide should be used by brands, entrepreneurs, small businesses, PR companies, marketing strategists, online professionals, social media consultants and strategists as well as bloggers and others who use social media in conjunction with promoting a product or service to the consuming public. Non-compliance with this new update won’t bring a fine or a reprimand from the FTC. However, since these disclosures are a guide as to how the FTC will determine and evaluate unfair and deceptive trade practices which violate underlying laws it would not be wise to disregard them. The FTC is attempting to offer insight and transparency into what they look at in determining what consumer protection matters they will pursue. While it may not be exacting or crystal clear, it is an important tool to consider when making consumer focused marketing, advertising and sales decisions.

What are your thoughts about the 2013 FTC Dot Com Disclosures? Are you confused about what you have to do? Has the FTC gone too far? Are you mad because you disclose and others don’t?

 

Images courtesy of FTC Dot Com Disclosure Guide