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Earlier this month, the Federal Trade Commission (FTC) updated its guidelines for disclosures in digital media, “.Com Disclosures: How to Make Effective Disclosures in Digital Advertising” (Guide). The Guide, which updates a version originally released in 2000, addresses the expanding use of smart phones, tablets, and other portable devices by consumers, as well as the increased use of social media marketing by businesses.

The Guide, dated March 12, 2013, signals areas in which the FTC might bring an enforcement action. To be sure, the Guide applies only to disclosures required under laws enforced by the FTC, noting that disclosures in certain areas — such as sweepstakes and other promotions — may be governed by state or other federal laws. Nonetheless, the Guide offers insight as to how one regulatory agency intends to view disclosures, which may shed light on (or help guide) how states and other agencies interpret their respective requirements.

In some respects, the Guide is unsatisfying, as it does not provide many bright-line rules or safe harbors that many industry groups had hoped would be provided. But the Guide does outline general principles and puts in place some guideposts for evaluating the appropriateness of disclosures — most notably through the use of hypotheticals.

Some observations: 

• In the first instance, the basics of advertising law apply equally to marketing efforts using social media platforms and devices introduced since the earlier 2000 version of the Guide: (i) advertising must be truthful and not misleading; (ii) advertisers must have evidence to substantiate their claims; and (iii) advertisements cannot be unfair. 
• Space limitations (e.g., Web banners), character limitations (e.g., tweets), and smaller screen sizes pose a greater disclosure challenge for businesses engaged in social media marketing. Yet, despite these limitations, the FTC makes clear that the same standards apply to new social media as to older media. The FTC’s position is that if adequate disclosures cannot be made using a particular social medium, then that medium should not be used for the particular ad (or the business needs to change the ad copy to remove any material that might require disclosures). As the Guide summarizes, “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.” 
• Disclosures must be clear and conspicuous, notwithstanding the limitations of social media platforms and devices. While noting that “there is no set formula for clear and conspicuous disclosures,” several factors help evaluate whether a particular disclosure is clear and conspicuous, including: 
  • Proximity of the disclosure to the claim that it is qualifying 
  • Prominence of the disclosure 
  • Extent to which other features of an advertisement might distract from a disclosure 
  • Repetition of the disclosure in different locations and at different times 
  • Whether consumers can easily understand the disclosure 
• The proximity of disclaimers takes on added importance in the updated Guide, particularly given that many consumers are using smaller screens (e.g., smart phones, tablets) to view online information. Disclosures should be made “as close as possible” to the relevant claim. User habits should also be considered by advertisers. Some examples: 
  • Because consumers tend not to scroll down entire screens, disclaimers for claims made in the body of an advertisement should be placed adjacent to the relevant claim and not at the bottom of screens (especially if there is “dead space” between the body of the advertisement and the respective disclosure). 
  • Disclaimers should appear before the “submit” or “enter order” button, as consumers may not look below such action buttons to read additional information. 
  • Because of space constraints on certain devices, disclaimers might not be adequate if they appear in a section other than the main text. One hypothetical shows a Web page that is broken out in various columns. The disclaimer does not appear directly below (and with) the pertinent advertising language; rather it is in a separate column on the left side of the Web page. The suggestion is that, if a consumer were to view the advertisement on a smart phone, he/she might not scroll sideways and see the important disclosure. 
• “Check-the-box” disclosures are often an effective way to ensure that consumers have seen and read important information or conditions. However, general disclosures such as “I agree with terms and conditions” might not be specific or detailed enough, especially if key waivers are buried within extended disclosures, privacy policies, or official rules. Quite notably, the Guide states that check-the-box disclosures are effective if the boxes are unchecked, as this demonstrates affirmative consent. By implication, the use of pre-checked boxes appears to be discouraged. 
• One of the hypotheticals addresses the use of smaller-type, different-colored fonts for disclaimers. In one hypothetical, the disclaimer is in a reduced font, and the color of the text makes the disclaimer blend in more with its surroundings than the main text. (In the example, a gray disclaimer on a light-blue background is used after the main text appears in black on the same light-blue background.) The Guide finds fault with such a disclaimer, noting that the change in color and reduced font size makes it harder to reach and digest. The general principle is that the disclosure should be just as accessible and prominent as the main text. 
• Special mention is given to advertisements made through blog postings and tweets. Again, disclaimers must be as close as possible to the actual language requiring the disclosure. Moreover, advertisers should not assume that consumers will see and associate multiple space-constrained advertisements. In effect, this means that each message/tweet/post should be accompanied by a disclosure. It is not enough, according to one hypothetical, to tweet a message saying “I am a paid sponsor of X” and then later send a tweet as part of that sponsorship that does not include a disclaimer. This further suggests that a general disclosure on a blog site (“I get paid by companies to review their products”) would not be enough, but rather bloggers should include a disclaimer with each sponsored posting/tweet.

The Guide provides a few examples of what likely would be deemed sufficient disclosure in a tweet. Starting a tweet by using “Ad:” or “Sponsored” is likely sufficient to inform consumers that the Twitter user is receiving some sort of compensation. But, in one hypothetical, the Guide suggests that “#spon.” at the end of a tweet might not be sufficient. 

• Various industry groups have been pushing for the extended use of icons to flag disclosures. The Guide specifically notes that icons will not suffice unless they are generally understood by consumers. (Query whether this creates a chicken-or-egg problem.) By way of example, one hypothetical suggests that an “FS” symbol would not necessarily be understood by consumers to mean that the reviewer received a free sample. 
• Hyperlinks also receive a significant amount of attention. The Guide states:

Disclosures that are an integral part of a claim or inseparable from it should not be communicated through a hyperlink. Instead, they should be placed on the same page and immediately next to the claim, and be sufficiently prominent so that the claim and disclosure are read at the same time, without referring the consumer somewhere else to obtain this important information.

(See p. 10.) While the Guide does not specify what exactly constitutes an “integral part of a claim,” it does cite examples such as cost information and health and safety disclosures. 

• Notwithstanding the general admonition cited above, well-described hyperlinks might be an acceptable way to disclose information under certain circumstances. Indeed, the Guide recognizes that even some integral disclosures may be too complex to describe immediately adjacent to a claim without the use of a hyperlink. Where hyperlinks are used, the Guide provides the following guidance: 
  • First, hyperlinks should be clearly identifiable and consistently used across the platform. The Guide advises using some combination of color/font/underline to make clear that a link exists. (Merely underlining a link may not be sufficient.) 
  • Second, hyperlinks should be specifically labeled. Hyperlinks such as “More Information,” “Disclaimer,” “Details,” “Terms & Conditions,” etc., might not be sufficient. Rather, the hyperlink should specifically identify the nature of the information found. Several examples from the hypotheticals: If a product comes with a service plan, the hyperlink should be “Get service plan prices.” If restocking fees might be charged for returned items, the hyperlink should say “Restocking fee applies to all returns.” 
  • Third, links should be targeted and easy to use. Consumers should be linked directly to a clear and simple disclosure rather than a general Web site that may include disclosures at various locations on the page. The Guide cautions against using pop-up windows that might be blocked by pop-up blockers or Web filters, and it advises companies to confirm that disclosures are readily accessible and prominent across multiple platforms. 
  • Fourth, hyperlinks should be close in space and style to the main text. Hyperlinks disconnected from their respective claims or those appearing at the bottom of a page in smaller type are more likely to be ignored by consumers.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your �鶹ֱ�� attorney or the following:

Paul Bargren
Partner
Milwaukee, Wisconsin
414.297.5537
[email protected]

John E. Turlais
Senior Counsel
Milwaukee, Wisconsin
414.297.5584
[email protected]