Editorial · April 5, 2013
Online Ad Disclosures: What the FTC Expects of Sellers
Online ad disclosures that prevent deception must be clear, and they should sit as close as possible to the claim they explain. That is the gist of the guide that staff at the Federal Trade Commission (FTC) released on March 12, 2013. It covers websites, phones and social media.
A disclosure is a fact that keeps a claim from misleading, such as a fee, a limit, a paid endorsement or the typical result. If a shopper never sees it, it cannot correct the impression the claim leaves.
What the March 2013 guide says
The guide is titled .com Disclosures: How to Make Effective Disclosures in Digital Advertising. It updates a version from May 2000 to cover smartphones with small screens and social media marketing.
The law is the same on every screen. The FTC Act bans unfair or deceptive acts or practices. A fact needed to prevent that must be clear and conspicuous, so shoppers are likely to notice and understand it. The guide is staff advice and offers no safe harbor. The FTC judges a disclosure by whether the information reaches shoppers.
One point is blunt: if a needed disclosure cannot be made clearly on a device or platform, the FTC says that device or platform should not carry the ad.
Put the fact next to the claim
The 2000 guide said a disclosure should be near the claim, on the same screen when possible. The new one says as close as possible. When it is practical, build the limit into the claim itself.
Cost facts and some health and safety facts should not sit behind a link. In the FTC's sample ad, a home camera needs a monthly plan. The model wording next to the price is "Service plan required. Get service plan prices." The link leads to the full rates, which are too complex to fit beside the price. A monthly fee shown only at checkout would likely fall short, though sales tax and reasonable shipping are fine there.
Label links with care. "Details," "more information" and "fine print" are likely inadequate, and an icon alone is unlikely to work. If shoppers must scroll, say what is below, such as "see below for important information on restocking fees." Skip pop-ups, because blockers can stop them.
Make it easy to see on every screen
A site that looks fine on a desktop can fail on a phone. The FTC says a disclosure too small to read on a phone, with no way to enlarge it, does not count. A fact in a side column may be missed by a shopper who zooms in on the center of the page.
Try to make the fact at least as large as the claim, in a color that stands out, and do not bury it in terms of use. On a long site, repeat it as needed, since some shoppers enter in the middle.
Tweets, banners and other small ads
A seller whose tweet or banner needs a disclosure is not exempt from the rules. Put the fact in the ad when it fits. A link to a page with the fact can work in some cases, such as a product sold only on the seller's own site. It falls short when shoppers can also buy in a store or elsewhere online, since some may not click. If the fact will not fit, change the claim or skip that format.
Each post should stand on its own, so a follow-up tweet is not enough. The FTC's sample paid tweet opens with "Ad:" and adds a short note on typical results. The word "Sponsored" likely works, but a code such as "#spon" may not be understood. The FTC's question-and-answer page adds that "#paid ad," "#paid" and "#ad" might be effective.
Reviews, bloggers and affiliates
Under the FTC's Endorsement Guides, a paid review is an endorsement, even on a personal blog. Announced on October 5, 2009, the FTC's revisions were the first update since 1980. They took effect on December 1, 2009. A tie to the seller must be fully disclosed when readers would not expect it. Pay, a free product, a commission or a job with the seller can all change how much weight readers give a review.
In the Guides' own example, a gaming blogger gets a free game system from its maker. The blogger should say so clearly, and the maker should have a way to try to monitor the posts. The FTC's question-and-answer page says one note on a home page is not enough, since readers may read a review without seeing the home page. A button that says DISCLOSURE is unlikely to be enough either. Putting the words in the review itself is safer.
Typical results need care too. Without proof that a testimonial's results are typical, the FTC says an ad must clearly state what buyers can generally expect. The old line "results not typical" is no longer a safe harbor.
The Guides are not law, but practices that go against them can lead to action under the FTC Act, and both sellers and endorsers can be held responsible. In March 2011 Legacy Learning Systems agreed to a proposed $250,000 settlement of FTC charges over online reviews by paid affiliates. The FTC charged that Legacy's ads presented affiliates as ordinary buyers or independent reviewers, without clearly saying they earned a commission on each sale. The settlement was not an admission of a violation. An FTC official said advertisers who use affiliates would be wise to monitor them.
Five checks before you post
- Reword the claim if you can, so the limit is part of it.
- Put the fact beside the claim, in plain words, before the buy button.
- View the ad on a phone. If the fact is tiny or off to the side, fix it.
- On a tweet or banner, fit the fact in the ad, or change the ad.
- Tell paid reviewers, bloggers and affiliates to disclose their ties, and check their posts.