Dot Com Disclosures --
FTC Rules on Internet Advertising
Overview
Although the number of
companies advertising online—and the number of consumers
shopping online—are soaring, fraud and deception may dampen consumer confidence in
the e-marketplace. But cyberspace is not without boundaries, and fraud and deception are
unlawful no matter what the medium. The FTC has enforced and will continue enforcing its
consumer protection laws online to ensure that products and services are described
truthfully in online ads and that consumers get what they pay for. These activities
benefit consumers as well as sellers, who expect and deserve a fair marketplace.
Many of the general principles of advertising law apply to Internet ads, but new issues
arise almost as fast as technology develops. This booklet describes the information
businesses should consider as they develop online ads to ensure that they comply with the
law. Briefly,
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The same consumer protection laws that apply to commercial activities in
other media apply online. The FTC Act’s prohibition on "unfair or deceptive acts
or practices" encompasses Internet advertising, marketing and sales. In addition,
many Commission rules and guides are not limited to any particular medium used to
disseminate claims or advertising, and therefore, apply to online activities. |
 |
Disclosures that are required to prevent an ad from being misleading, to
ensure that consumers receive material information about the terms of a transaction or to
further public policy goals, must be clear and conspicuous. In evaluating whether
disclosures are likely to be clear and conspicuous in online ads, advertisers should
consider the placement of the disclosure in an ad and its proximity to
the relevant claim. Additional considerations include: the prominence of the
disclosure; whether items in other parts of the ad distract attention from the
disclosure; whether the ad is so lengthy that the disclosure needs to be repeated;
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. |
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To make a disclosure clear and conspicuous, advertisers
should:
- Place disclosures near, and when possible, on the same screen as the triggering claim.
- Use text or visual cues to encourage consumers to scroll down a Web page when it is
necessary to view a disclosure.
- When using hyperlinks to lead to disclosures,
- make the link obvious;
- label the hyperlink appropriately to convey the importance, nature and relevance of the
information it leads to;
- use hyperlink styles consistently so that consumers know when a link is available;
- place the hyperlink near relevant information and make it noticeable;
- take consumers directly to the disclosure on the click-through page;
- assess the effectiveness of the hyperlink by monitoring click-through rates and make
changes accordingly.
- Recognize and respond to any technological limitations or unique characteristics of high
tech methods of making disclosures, such as frames or pop-ups.
- Display disclosures prior to purchase, but recognize that placement limited only to the
order page may not always work.
- Creatively incorporate disclosures in banner ads or disclose them clearly and
conspicuously on the page the banner ad links to.
- Prominently display disclosures so they are noticeable to consumers, and evaluate the
size, color and graphic treatment of the disclosure in relation to other parts of the Web
page.
- Review the entire ad to ensure that other elements—text, graphics, hyperlinks or
sound—do not distract consumers’ attention from the disclosure.
- Repeat disclosures, as needed, on lengthy Web sites and in connection with repeated
claims.
- Use audio disclosures when making audio claims, and present them in a volume and cadence
so that consumers can hear and understand them.
- Display visual disclosures for a duration sufficient for consumers to notice, read and
understand them.
- Use clear language and syntax so that consumers understand the disclosures.
|
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Commission rules and guides that use specific
terms—"written," "writing," "printed" or "direct
mail"—are adaptable to new technologies.
- Rules and guides that apply to written ads or printed materials also apply to visual
text displayed on the Internet.
- If a seller uses email to comply with Commission rule or guide notice requirements, the
seller should ensure that consumers understand that they will receive such information by
email and provide it in a form that consumers can retain.
- "Direct mail" solicitations include email. If an email invites consumers to
call the sender to purchase goods or services, that telephone call and subsequent sale
must comply with the Telemarketing Sales Rule requirements.
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I. Introduction
Day in
and day out, businesses are going online to advertise and sell their products
and services. The Internet combines aspects of print, television, and radio advertising in
an interactive environment, and while it presents a new and fast-paced experience for
consumers, it also raises interesting—and occasionally complex—questions about
the applicability of laws that were developed long before "dot com" became a
household phrase.
The Federal Trade Commission has examined how its own consumer protection rules and
guides apply to advertising and sales made via the Internet. This staff working paper
discusses FTC requirements that disclosures be presented clearly and conspicuously, in the
context of Internet advertisements. It also discusses how certain rules and guides apply
to online activities, when the rule or guide refers to "written" ads or
"direct mail" solicitations or requires notices to be sent to consumers.
The publication of this staff working paper follows a public comment period and a
public workshop which was held to discuss the applicability of FTC rules and guides to
online activities.1 In evaluating how disclosures can be
displayed clearly and conspicuously in online ads, the comments and workshop discussion
focused specifically on disclosures required by the rules and guides.2
The same analysis that applies to rule and guide disclosures also applies to disclosures
that are necessary to prevent deception under Section 5 of the FTC Act. They, too, must be
clear and conspicuous. Therefore, this paper addresses both types of disclosures.3
II. The Applicability of FTC Law
to Internet Advertising
The FTC Act’s
prohibition on "unfair or deceptive acts or practices" broadly covers
advertising claims, marketing and promotional activities, and sales practices in general.4 The Act is not limited to any particular medium. Accordingly,
the Commission’s role in protecting consumers from unfair or deceptive acts or
practices encompasses advertising, marketing, and sales online, as well as the same
activities in print, television, telephone and radio. Indeed, since 1994, the Commission
has brought over 100 law enforcement actions to stop fraud and deception online and is
working to educate businesses about their legal obligations and consumers about their
rights.
For certain industries or subject areas, the Commission issues rules and guides. Rules
prohibit specific acts or practices that the Commission has found to be unfair or
deceptive.5 Guides help businesses in their efforts to comply
with the law by providing examples or direction on how to avoid unfair or deceptive acts
or practices.6 Many rules and guides address claims about
products or services or advertising in general and are not limited to any particular
medium used to disseminate those claims or advertising.7
Therefore, the plain language of many rules and guides applies to claims made on the
Internet.8 For example, the Mail or Telephone Order
Merchandise Rule, which addresses the sale of merchandise that is ordered by mail,
telephone, facsimile or computer, applies to those sales regardless of "the method
used to solicit the order."9 
Solicitations made in print, on the
telephone, radio, TV or online naturally fall within the Rule’s scope. In addition,
the Guides Concerning the Use of Endorsements and Testimonials in Advertising apply to
endorsements, which are defined as "any advertising message . . . [that] consumers
are likely to believe reflects the opinions, beliefs, findings, or experience of a party
other than the sponsoring advertiser."10 The Guides
refer to advertising without limiting the media in which it is disseminated, and
therefore, encompass online ads.
III. Clear and Conspicuous
Disclosures in Online Advertisements
When it comes to online ads,
the basic principles of advertising law apply:
Advertising must be truthful and not misleading;11
Advertisers must have evidence to back up their claims
("substantiation");12 and
Advertisements cannot be unfair.13
Unique features in Internet ads also may affect how an ad and any required disclosures
are evaluated.
A. Background on Disclosures
Advertisers must identify all express and implied claims that the ad conveys to
consumers. When identifying claims, advertisers should not focus only on individual
phrases or statements, but should consider the ad as a whole, including the text, product
name and depictions.14 If an ad makes express or implied
claims that are likely to be misleading without certain qualifying information, the
information must be disclosed. Advertisers must determine which claims might need
qualification and what information should be provided in a disclosure. If qualifying
information is necessary to prevent an ad from being misleading, advertisers must present
the information clearly and conspicuously.
A disclosure only qualifies or limits a claim, to avoid a misleading impression. It
cannot cure a false claim. If a disclosure provides information that contradicts a claim,
the disclosure will not be sufficient to prevent the ad from being deceptive. In that
situation, the claim itself must be modified.
Many Commission rules and guides spell out the information that must be disclosed in
connection with certain claims. In many cases, these disclosures prevent a claim from
being misleading or deceptive.15 Other rules and guides
require disclosures to ensure that consumers receive material information about the terms
of a transaction,16 or to further public policy goals.17 These disclosures also must be clear and conspicuous.
B. The Clear and Conspicuous Requirement
Disclosures that are required to prevent deception—or to provide consumers
material information about a transaction—must be presented "clearly and
conspicuously."18 Whether a disclosure meets this
standard is measured by its performance—that is, how consumers actually perceive and
understand the disclosure within the context of the entire ad. The key is the overall
net impression of the ad—that is, whether the claims consumers take from the ad
are truthful and substantiated.19
In reviewing their online ads, advertisers should adopt the perspective of a reasonable
consumer.20 They also should assume that consumers
don’t read an entire Web site, just as they don’t read every word on a printed
page.21 In addition, it is important for advertisers to draw
attention to the disclosure. Making the disclosure available somewhere in the ad so that
consumers who are looking for the information might find it doesn’t meet the
clear and conspicuous standard.
Even though consumers have control over what and how much information they view on Web
sites, they may not be looking for—or expecting to find—disclosures. Advertisers
are responsible for ensuring that their messages are truthful and not deceptive.
Accordingly, disclosures must be communicated effectively so that consumers are likely to
notice and understand them.
C. What are Clear and Conspicuous
Disclosures?
There is no set formula for a clear and conspicuous disclosure. In all media, the best
way to disclose information depends on what information must be provided and the nature of
the advertisement. Some disclosures are quite short, while others are more detailed. Some
ads use only text, while others use graphics, video and audio. Advertisers have the
flexibility to be creative in designing their ads, so long as necessary disclosures are
communicated effectively and the overall message conveyed to consumers is not misleading.
To evaluate whether a particular disclosure is clear and conspicuous, consider:
the placement of the disclosure in an advertisement and
its proximity to the claim it is qualifying,
the prominence of the disclosure,
whether items in other parts of the advertisement distract
attention from the disclosure,
whether the advertisement is so lengthy that the disclosure needs to be repeated,
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 following discussion uses these traditional factors to evaluate whether disclosures
are likely to be clear and conspicuous in the context of online ads. In the online version
of this booklet, the underlined hyperlinks link to mock ads. In the printed booklet, the
circles in the margin correspond to mock ads in the appendix. Each mock ad presents a
scenario to illustrate one or more particular factors. Advertisers must consider all of
the factors, however, and evaluate an actual disclosure in the context of the ad as a
whole.
1. Proximity and Placement
A disclosure is more effective if it is placed near the claim it qualifies or other
relevant information. Proximity increases the likelihood that consumers will see the
disclosure and relate it to the relevant claim or product. For print ads, an advertiser
might measure proximity in terms of whether the disclosure is placed adjacent to the
claim, or whether it is separated from the claim by text or graphics. The same approach
can be used for Internet ads. Web sites, however, are interactive and have a certain
depth—with multiple pages linked together and pop-up screens, for example—that
may affect how proximity is evaluated.
a. Evaluating Proximity in the
Context of a Web Page
Some disclosures must be made when an ad contains a certain claim (often referred to as
a "triggering claim"). On a Web page, the disclosure is more likely to be
effective if consumers view the claim and disclosure together on the same screen. Example 1. Even if a disclosure is not tied to a particular word
or phrase, it is more likely that consumers will notice it if it is placed next to the
information, product, or service to which it relates.
In some circumstances, it may be difficult to ensure that a disclosure appears on the
"same screen" as a claim or product information. Some disclosures are long and
difficult to place next to the claims they qualify. In addition, computers and other
information "appliances" have varying screen sizes that display Web sites
differently.22 In these situations, consumers may need to
scroll to view a disclosure. If scrolling is necessary, advertisers should ask whether
consumers are likely to do it. If consumers don’t scroll, they may miss important
qualifying information and be misled.
In these circumstances, advertisers are advised to:
Use text or visual cues to encourage consumers to scroll.
Text prompts can indicate that more information is available. An explicit
instruction like "see below for important information on diamond weights" will
alert consumers to scroll and look for the information. The text prompt should be tied to
the disclosure that it refers to. General or vague statements, such as "see below for
details," provide no indication about the subject matter or importance of the
information that consumers will find and are not adequate cues.
The visual design of the page also could help alert consumers to the availability of
more information. For example, text that clearly continues below the screen, whether
spread over an entire page or in a column, would indicate that the reader needs to scroll
for additional information. Example 2. Advertisers should
consider how the Web page is displayed by the default Web browser setting for which the ad
is designed, as well as for different display options.
A scroll bar on the side of a computer screen is not a sufficiently effective visual
cue. Although the scroll bar may indicate to some consumers that they have not reached the
end of a page, many consumers may not look at the scroll bar. In fact, some consumers
access the Internet with devices that don’t display a scroll bar.
Avoid Web page formats that discourage scrolling.
The design of some pages might indicate that there is no more information on the
page and no need to continue scrolling. If the text ends before the bottom of the screen
or readers see several inches of blank space, chances are they will stop scrolling and
miss the disclosure. Example 3. In addition, if there is a
lot of unrelated information—either words or graphics—separating a claim and a
disclosure, even a consumer who is prompted to scroll might miss the disclosure or not
relate it to a distant claim they’ve already read.
b. Hyperlinking to a Disclosure
With hyperlinks, additional information, including disclosures, might be placed on a
Web page entirely separate from the relevant claim. Disclosures that are an integral part
of a claim or inseparable from it, however, should be placed on the same page and
immediately next to the claim. In these situations, the claim and the disclosure should be
read at the same time, without referring the consumer somewhere else to obtain the
disclosure. This is particularly true for cost information or certain health and safety
disclosures. For example, if the total cost of a product is advertised on one page, but
there are significant additional fees that the consumer would not expect to be charged,
the existence of those additional fees should be disclosed on the same page and
immediately adjacent to the total cost claim.23 Example 4. In other situations, it may not even be necessary to
use a hyperlink to convey disclosures. Often, disclosures consist of a word or phrase that
may be easily incorporated into the text, along with the claim. Example
5. This placement increases the likelihood that consumers will see the disclosure and
relate it to the relevant claim.
Under some conditions, however, a disclosure accessible by a hyperlink may be
sufficiently proximate to the relevant claim. Hyperlinked disclosures may be particularly
useful if the disclosure is lengthy or if it needs to be repeated (because of multiple
triggers, for example). The key considerations for effective hyperlinks are:
the labeling or description of the hyperlink,
the consistency in the use of hyperlink styles,
its placement and prominence on the Web page, and
the handling of the disclosure on the click-through page.
Choosing the right label for the hyperlink. A hyperlink that leads to
a disclosure should be labeled clearly and conspicuously. The hyperlink’s
label—the text or graphic assigned to it—affects whether consumers actually
click on it and see and read the disclosure.
Make it obvious. Consumers should be able to tell that
they can click on a hyperlink to get more information.
Label the link to convey the importance, nature and relevance of
the information it leads to. The hyperlink should give consumers a reason
to click on it. That is, the label should make clear that the link is related to a
particular advertising claim or product and indicate the nature of the information to be
found by clicking on it. Example 6. The hyperlink label
should use clear, understandable text. Although the label itself does not need to contain
the complete disclosure, it may be useful to incorporate part of the disclosure to
indicate the type and importance of the information the link leads to.
Don’t
be coy. Some text links may provide no indication about why a claim is qualified
or the nature of the disclosure. In most cases, simply hyperlinking a single word or
phrase in the text of an ad may not be effective. Example 7.
Although some consumers may understand that there is additional information available,
they may have different ideas about the nature of the information and its significance. Example 8. The same may be true of hyperlinks that simply say
"disclaimer," "more information," "details," or "terms
and conditions." Example 9 and Example
10.
- Don’t be subtle. Asterisks or other symbols by themselves may not
be effective. Typically, they provide no clues about why the claim is qualified or the
nature of the disclosure.24 Example
11. In fact, consumers may view an asterisk or another symbol as just another graphic
on the page. Example 12. Even if a Web site explains that a
particular symbol is a hyperlink to important information, consumers might miss the
explanation, depending on where they enter the site and how they navigate through it.
Using hyperlink styles consistently allows consumers to know when a link is
available. Although the text or graphics used to signal a hyperlink may differ
among Web sites, treating hyperlinks inconsistently within a single site can increase the
chances that consumers will not notice—or click on—a disclosure
hyperlink. For example, if hyperlinks usually are underlined in a site, chances are
consumers wouldn’t recognize italicized text as being a link, and could miss the
disclosure.
Placing the link near relevant information and making it noticeable.
The hyperlink should be proximate to the claim that triggers the disclosure so that
consumers can notice it easily and relate it to the claim. Typically, this means that the
hyperlink is adjacent to the triggering term or other relevant information. Example 13. Consumers may miss disclosure hyperlinks that are
separated from the relevant claim by text, graphics, blank space, or intervening
hyperlinks. Example 14. Format, color or other graphics
treatment also can help to ensure that consumers notice the link. (See below for more
information on prominence.)
Getting to the disclosure on the click-through page should be easy.
The click-through page—that is, the page the hyperlink leads to—must contain the
complete disclosure. The disclosure must be displayed prominently. Distracting visual
factors, extraneous information, and many "click-away" opportunities to link
elsewhere before viewing the disclosure can obscure an otherwise adequate disclaimer. Example 15.
Get consumers to the message quickly. The hyperlink
should take consumers directly to the disclosure. They shouldn’t have to search a
click-through page or go to other pages for the information. Example
16. In addition, the disclosure should be easy to understand.
Assessing the effectiveness of a hyperlink disclosure is
important. Tools are available to allow advertisers to evaluate the effectiveness
of disclosures through hyperlinks. For example, advertisers can monitor click-through
rates—how often consumers click on a hyperlink and view the click-through
page—for accurate data on the efficacy of the hyperlink. Advertisers also can
evaluate the amount of time visitors spend on a certain page, which may indicate whether
consumers are reading the disclosure.
- Don’t ignore your data. If hyperlinks are not followed, another
method of conveying the required information would be necessary.
c. Using High Tech Methods For
Proximity and Placement
Disclosures may be displayed on Web sites in many ways. For example, a disclosure may
be placed in a frame that remains constant even as the consumer scrolls down the page or
navigates through another part of the site. A disclosure also might be displayed in a
window that pops-up or on interstitial pages that appear while another Web page is
loading. New techniques for displaying information are being unveiled all the time. But
there are special considerations for evaluating whether a technique is appropriate for
providing required disclosures.
Don’t ignore technological limitations. A
scrolling marquee—information that scrolls through a box on a Web site—may
display differently depending on the type of browser a consumer uses. Example 17. Similarly, some browsers or information
appliances may not support or display frames properly, so a disclosure placed in one
portion of the frame may not be viewable. Example 18.
Certain Internet tools may overcome this limitation by determining if a consumer’s
Web browser can view frames and if not, serving a page that is formatted differently.
Without such tools, advertisers should be concerned about whether a required disclosure
will appear; if it won’t, they should choose different ways to communicate the
disclosure.
Recognize and respond to characteristics of each technique.
Some consumers may miss information presented in a pop-up window or on an interstitial
page if the window or page disappears and they are unable or unaware of how to access it.
Others may inadvertently minimize a pop-up screen by clicking on the main page and may not
know how to make the pop-up screen reappear. Example 19.
There may be ways to get around these drawbacks, such as requiring the consumer to take
some affirmative action to proceed past the pop-up or interstitial (for example, by
clicking on a "continue" button).
- Research can help. Research may be useful to help advertisers determine
whether a particular technique is an effective method of communicating information to
consumers. For example, research may show that consumers don’t actually read
information in pop-up windows because they immediately close the pop-up on the page they
want to view. It also may indicate whether consumers relate information in a pop-up window
or on an interstitial page to a claim or product they haven’t encountered yet.
Advertisers should consider this information in determining effective methods of
presenting required disclosures.
d. Displaying Disclosures Prior
to Purchase
Disclosures must be effectively communicated to consumers before they make a purchase
or incur a financial obligation. Disclosures are more likely to be effective if they are
provided in the context of the ad, when the consumer is considering the purchase. Where
advertising and selling are combined on a Web site, disclosures should be provided before
the consumer makes the decision to buy, say, before clicking on an "order now"
button or a link that says "add to shopping cart."
- Don’t focus only on the order page. Some disclosures must be made
in connection with a particular claim or product. Consumers may not relate a disclosure on
the order page to information they viewed many pages earlier. Example
20. It also is possible that after surfing a company’s Web site, some consumers
may decide to purchase the product from the company’s "bricks and mortar"
store. Those consumers would miss any disclosures placed only on the ordering page.
e. Evaluating Proximity With
Banner Ads
Most banner ads displayed today are teasers. Because of their small size, they
generally do not provide complete information about a product or service. Instead,
consumers must click through to the Web site to get more information and learn the terms
of an offer. In some instances, a banner may contain a claim that requires qualification.
Disclose required information in the banner itself or clearly
and conspicuously on the Web site it links to. In some cases, a required
disclosure can be incorporated into a banner ad easily. Because of the space
constraints of banner ads, other disclosures may be too detailed to be disclosed
effectively in the banner. In some instances, these disclosures may be communicated
effectively to consumers if they are made clearly and conspicuously on the Web site the
banner links to and while consumers are deciding whether to buy a product or service. In
determining whether the disclosure should be placed in the banner itself or on the Web
site the banner links to, advertisers should consider how important the information is to
prevent deception, how much information needs to be disclosed, the burden of disclosing it
in the banner ad, how much information the consumer may absorb from the ad, and how
effective the disclosure would be if it was made on the Web site.25
Use
creativity to incorporate or flag required information. Scrolling text or
rotating panels in a banner can present an abbreviated version of a required disclosure
that indicates that there is additional important information and a more complete
disclosure available on the click-through page. Example 21.
With lengthier disclosures, the banner can direct consumers to the Web site for more
information. The full disclosure then must be clearly and conspicuously displayed on the
Web site.
Provide any required disclosures in interactive banners.
Some banner ads allow consumers to interact within the banner, so that they may conduct a
transaction without clicking through to a Web site. If consumers can get complete
information about a product or make a purchase within an interactive banner, all required
disclosures should be included in the banner.
2. Prominence
It’s the advertiser’s responsibility to draw attention to the required
disclosures.
Size Matters. Disclosures that are at least as large as
the advertising copy are more likely to be effective.
Color Counts. A disclosure in a color that contrasts
with the background emphasizes the text of the disclosure and makes it more noticeable. Example 22. Information in a color that blends in with
the background of the ad is likely to be missed. Example 23.
Graphics Help. Although using graphics to display a
disclosure is not required, they may make the disclosure more prominent.
- Evaluate the size, color, and graphics of the disclosure in relation to other
parts of the Web site.26 The size of a disclosure
should be compared to the type size of the claim and other text on the page. If a claim
uses a particular color or graphic treatment, the disclosure can be formatted the same way
to help ensure that consumers who view the claim are able to view the disclosure as well.
In addition, the graphic treatment of the disclosure may be evaluated in relation to how
graphics are used to convey other items in the ad.
- Don’t bury it. The prominence of the disclosure also may be
affected by other factors. A disclosure that is buried in a long paragraph of unrelated
text would not be effective. The unrelated text detracts from the message and makes it
unlikely that a consumer would notice the disclosure or recognize its importance. Even
though the unrelated information may be useful, advertisers must ensure that the
disclosure is communicated effectively.
3. Distracting Factors in Ads
The clear and conspicuous analysis does not focus only on the disclosure itself. It
also is important to consider the entire ad. Elements like graphics, sound, text or even
hyperlinks that lead to other pages or sites, may result in consumers not noticing,
reading or listening to the disclosure.
- Don’t let other parts of an ad get in the way. On television,
moving visuals behind a text message make the text hard to read and may distract
consumers’ attention from the message. Using graphics online raises similar concerns:
flashing images or animated graphics may reduce the prominence of a disclosure. Example 24. Graphics on a Web page alone may not
undermine the effectiveness of a disclosure. It is important, however, to consider all the
elements in the ad, not just the text of the disclosure.
4. Repetition
It may be necessary to disclose important information more than once in an
advertisement to convey a non-deceptive message. Repeating a disclosure makes it more
likely that a consumer will notice and understand it. Still, the disclosure need not be
repeated so often that consumers would ignore it and that it would clutter the ad.
Repeat disclosures on lengthy Web sites, as needed.
Consumers can access and navigate Web sites differently. Many consumers may access a site
through its homepage, but others might enter in the middle, perhaps by linking to that
page from a search engine or another Web site. Consumers also might not click-on every
page of the site and may not choose to scroll to the bottom of each page. And many may not
read every word on every page of a Web site. As a result, advertisers should question
whether consumers who see only a portion of their ad are likely to miss a necessary
disclosure and be misled.27
Repeat disclosures with repeated claims, as needed. If
claims requiring some qualification are repeated throughout an ad, it may be necessary to
repeat the disclosure too. In some situations, a disclosure is tied so closely to a claim
that it must always accompany the claim to prevent deception. Depending on the disclosure,
a clearly-labeled hyperlink could be repeated on various pages so that the full disclosure
would be placed on only one page of the site.
5. Multimedia Messages
Internet ads may contain audio messages, video clips and other animated segments with
claims that require qualification. As with radio and television ads, the disclosure should
accompany the claim. In evaluating whether disclosures in these multimedia portions of
online ads are clear and conspicuous, advertisers should evaluate all of the factors
discussed in this paper and these special considerations:
For audio claims, use audio disclosures. The disclosure
should be in a volume and cadence sufficient for a reasonable consumer to hear and
understand it. The volume of the disclosure can be evaluated in relation to the rest of
the message, and in particular, the claim. Of course, consumers who do not have speakers,
appropriate software, or appliances with audio capabilities will not hear the claim or the
disclosure. Because some consumers may miss the audio portion of an ad, disclosures
triggered by a claim or other information in an ad’s text should not be placed solely
in an audio clip.
Display visual disclosures for a sufficient duration.
Visual disclosures presented in video clips or other dynamic portions of online ads should
appear for a duration sufficient for consumers to notice, read and understand them. As
with brief video superscripts in television ads, fleeting disclosures on Web sites are not
likely to be effective.
6. Understandable Language
To ensure that disclosures are effective, consumers must be able to understand them.
Advertisers should use clear language and syntax and avoid legalese or technical jargon.
Disclosures should be as simple and straightforward as possible. Incorporating extraneous
material into the disclosure also may diminish the message that must be conveyed to
consumers.
IV. Specific Issues in Applying
Certain Rules and Guides to Internet Activities
A. It’s Not Just Paper Anymore
Some Commission rules and guides use certain terms—such as "written,"
"writing" and "printed"—that connote words or information on
paper. With the increasing use of computers and other electronic devices, that meaning is
changing. In addition, thanks to email, businesses are no longer limited to using
traditional communications vehicles like mail or the telephone to comply with rule or
guide requirements to notify consumers.
1. Rules and Guides that Use the
Terms "Written," "Writing" or "Printed"
Many rules and guides use the terms "written," "writing" and
"printed," but in different ways. Some apply to written ads or transactions,
using the term written to connote visual text. Others require information to be disclosed
in writing, signaling the importance of text and the ability to retain and refer to the
information more than once. Because each term must be analyzed within the context of the
rule and guide itself, the Commission will continue to examine the exact nature of how
these rules and guides apply to the paperless world of e-commerce and online advertising
on a case-by-case basis and through periodic rule and guide reviews.28
For the most part, however, Commission rules and guides that use the words
"written," "writing" and "printed" will apply online. In
many cases, an Internet ad that uses visual text is the equivalent of a
"written" ad. Consumers expect to receive the same information and protections
whether they’re looking at a paper catalog or an online one. For example:
Claims "in writing . . . or in any broadcast advertisement"
about an appliance’s energy use or efficiency must be tested in accordance with the
Appliance Labeling Rule.29 Common sense dictates that this
includes online claims. An energy use claim presented in visual text on a Web site should
be treated the same as a claim in a print ad.
If certain information about energy efficiency must be provided in
"printed" catalogs featuring appliances,30 the
information also should be provided online. There are no more constraints to providing
this information on a Web site than there would be on paper.
2. Using New Technologies to Comply
with Rules & Guides
As more activities and transactions take place online, businesses are using email to
communicate with their customers. In some cases, email may be used to comply with a rule
or guide requirement to provide or send required notices or documents to consumers. A key
consideration for choosing this method of delivery is whether consumers understand or
expect that they will receive important information by email. 
In addition, information should be provided in
a form that consumers can retain, either by saving or printing. Here are examples of how
these considerations apply to particular rules:
If a seller cannot ship goods ordered by mail, telephone, or computer
within the time promised (or otherwise 30 days), the seller must inform consumers of the
delay and give them the option to agree to the delay or cancel the order and get a refund.31 Sellers are not required to use a particular method to send
delay notices and online merchants may use email to send these notices. Consumers often
provide their email address as part of an online order form. It may make good business
sense for a seller to tell consumers that they plan to send any delay notices to that
email address. This information may be added to an online order form without substantial
cost or difficulty and may alert consumers that future communications about the order will
occur online.
Online sellers of negative option plans—such as book-of-the-month
clubs—also may use email to communicate with consumers. With these plans, sellers
send announcements that identify the merchandise that will be shipped and billed for
that month unless the consumer declines by a certain date.32
These monthly notices are an important part of the plan. If consumers don’t
understand that notices are sent by email, they may not respond and may incur charges for
merchandise they don’t want. Because sellers are required to clearly and
conspicuously disclose the material terms of the plan in their promotional materials, they
should clearly inform consumers about how the notices will be sent before consumers enroll
in the plan.
Sellers that offer written warranties on consumer products must include
certain information in their warranties and make them available for review at the point of
purchase.33 Warranties communicated through visual text on
Web sites are no different than paper versions and the same rules apply. The requirement
to make warranties available at the point of purchase can be accomplished easily on the
Internet. For example, Internet merchants may use a clearly-labeled hyperlink such as
"click here for warranty information" to lead to the full text of the warranty.
Because consumers may need to refer to the warranty while comparison shopping or after the
purchase, the warranty should be presented in a way that is capable of being preserved,
either by downloading or printing. This is especially important if a paper warranty is not
included with the product.
B. Direct Mail Solicitations Online
"Direct mail" solicitations generally refer to promotional materials that
consumers receive through traditional mail. With technological advances, these kinds of
solicitations have moved online.
Although the Telemarketing Sales Rule applies largely to telemarketing calls from
business-to-consumer, it also applies to telephone calls the consumer places in response
to a "direct mail" advertisement.34 As with direct
mail sent by traditional means, email can convey the false impression that the recipient
has been "specially selected" for an offer not available to the general public.
That impression may be exploited in a telemarketing call, particularly if the direct mail
piece omits important information about the products or services offered. Therefore, if an
email invites consumers to telephone the sender to purchase goods or services, the phone
call is subject to the Telemarketing Sales Rule35—as is
the subsequent sale.
Not all online advertisements are considered "direct mail" solicitations.
Consumers who view most Web sites, newsgroups, or electronic bulletin board postings are
likely to understand that the goods or services are being offered on the same terms and
conditions to all consumers—and that they haven’t been "specially
selected" for the offer. Like television and newspaper advertisements, Web sites
generally, newsgroups, and electronic bulletin board postings are different forms of
advertising than "direct mail."36 Telephone calls
placed in response to these types of ads would generally be exempt from the Telemarketing
Sales Rule.37
V. Conclusion
Although the
number of companies advertising online—and the number of consumers
shopping online—are soaring, fraud and deception may dampen consumer confidence in
the e-marketplace. To ensure that products and services are described truthfully in online
ads and that consumers get what they pay for, the FTC has, and will continue to, enforce
its consumer protection laws. Many of the general principles of advertising law apply to
online ads, but new issues arise almost as fast as technology develops. The FTC will
continue to evaluate online advertising, using traditional criteria, while recognizing the
uniqueness of the new medium. Businesses as well should consider these criteria when
developing online ads and ensuring they comply with the law.
Endnotes
1 The Commission initially requested written comment on a
proposal that discussed how it would apply its rules and guides to online activities. 63
Fed. Reg. 24998 (May 6, 1998). After reviewing the comments, the Commission held a public
workshop on May 14, 1999, to explore the issues further. See 64 Fed. Reg. 14156 (Mar. 24,
1999) (announcing the workshop). Twenty-five groups, including businesses, trade
associations and consumer organizations, participated in the workshop discussion. The
focus of the workshop was an evaluation of how disclosures required by FTC rules and
guides can be displayed clearly and conspicuously in Internet advertisements. A shorter
session examined how terms such as "written," "writing" and
"printed" are used in FTC rules and guides and should be interpreted in light of
the use of electronic media. Additional written comments were submitted after the
workshop. The public comments and the workshop transcript are available at http://www.ftc.gov/bcp/rulemaking/elecmedia/index.htm
or from the FTC’s Consumer Response Center, 600 Pennsylvania Avenue, NW, Room 130,
Washington, DC 20580.
2 With the rules and guides, the content of the
disclosure generally is prescribed. Thus, it was unnecessary to examine broader issues
that might arise in examining advertising in general—for example, whether a
disclosure is even necessary or what it should say.
3 This working paper, however, does not address
disclosures required by regulations issued by the Federal Reserve Board: Regulation B, 12
C.F.R. Part 202; Regulation E, 12 C.F.R. Part 205; Regulation M, 12 C.F.R. Part 213;
Regulation Z, 12 C.F.R. Part 226. This paper also does not address which country’s
laws govern a particular transaction or sale. The FTC and other countries and
organizations have been evaluating these issues and will continue to work cooperatively in
this area. See http://www.ftc.gov/bcp/icpw/index.htm
for more information about international issues.
4 The Commission’s authority covers virtually every
sector of the economy, except for certain excluded industries, such as the business of
insurance and banks.
5 The Commission issues rules pursuant to Section 5 of
the FTC Act when it has reason to believe that certain unfair or deceptive acts or
practices are prevalent in an industry. 15 U.S.C. § 57a(a)(1)(B). The Commission may
seek civil penalties from any person or company that violates a rule "with actual
knowledge or knowledge fairly implied on the basis of objective circumstances that such
act is unfair or deceptive and is prohibited by such rule." 15 U.S.C.
§ 45(m)(1)(A). The Commission also may seek redress for consumers. 15 U.S.C.
§ 57b(a)(1). In addition, the Commission promulgates rules pursuant to specific
statutes, which are designed to further particular policy goals. The remedies available to
enforce these rules vary.
6 Guides are "administrative interpretations of the
laws administered by the Commission." 16 C.F.R. § 1.5. Although the guides do
not have the force and effect of law, the Commission may bring an enforcement action if a
person or company fails to comply with a guide and engages in an unfair or deceptive
practice in violation of the FTC Act.
7 The following rules and guides are included in this
category: Guides for the Nursery Industry (16 C.F.R. Part 18); Guides for the Rebuilt,
Reconditioned and Other Used Automobile Parts Industry (16 C.F.R. Part 20); Guides for the Jewelry, Precious Metals, and Pewter
Industries (16 C.F.R. Part 23); Guides for Select Leather and
Imitation Leather Products (16 C.F.R. Part 24); Tire Advertising and Labeling Guides
(16 C.F.R. Part 228); Guides Against Deceptive
Pricing (16 C.F.R. Part 233); Guides
Against Bait Advertising (16 C.F.R. Part 238); Guides for the Advertising of
Warranties and Guarantees (16 C.F.R. Part 239); Guides for the Household Furniture Industry
(16 C.F.R. Part 250); Guide Concerning Use of the
Word "Free" and Similar Representations (16 C.F.R. Part 251); Guides for Private Vocational and Distance
Education Schools (16 C.F.R. Part 254); Guides
Concerning Use of Endorsements and Testimonials in Advertising (16 C.F.R. Part 255);
Guides Concerning Fuel Economy Advertising for New Automobiles (16 C.F.R. Part 259); Guides for the Use of Environmental Marketing
Claims (16 C.F.R. Part 260); Rules
and Regulations Under the Wool Products Labeling Act of 1939 (16 C.F.R. Part 300); Rules and Regulations Under Fur
Products Labeling Act (16 C.F.R. Part 301); Rules and Regulations Under the
Textile Fiber Products Identification Act (16 C.F.R. Part 303); Rule Concerning
Disclosures Regarding Energy Consumption and Water Use of Certain Home Appliances and
Other Products Required Under the Energy Policy and Conservation Act ("Appliance
Labeling Rule") (16 C.F.R. Part 305); Rule Concerning Automotive Fuel Ratings,
Certification and Posting (16 C.F.R. Part 306); Labeling Requirements for Alternative
Fuels and Alternative Fueled Vehicles (16 C.F.R. Part 309); Telemarketing Sales Rule (16 C.F.R. Part 310);
Deceptive Advertising as to Sizes of Viewable Pictures Shown by Television Receiving Sets
(16 C.F.R. Part 410); Retail Food Store Advertising and Marketing Practices (16 C.F.R.
Part 424); Use of Prenotification Negative Option Plans (16 C.F.R. Part 425); Power Output
Claims for Amplifiers Utilized in Home Entertainment Products (16 C.F.R. Part 432);
Preservation of Consumers’ Claims and Defenses (16 C.F.R. Part 433); Mail or Telephone Order Merchandise Rule (16 C.F.R.
Part 435); Credit Practices Rule (16 C.F.R. Part 444); Used Motor Vehicle Trade Regulation
Rule (16 C.F.R. Part 455); Labeling
and Advertising of Home Insulation (16 C.F.R. Part 460); Interpretations of
Magnuson-Moss Warranty Act (16 C.F.R. Part 700); Disclosure of Written Consumer Product
Warranty Terms and Conditions (16 C.F.R. Part 701); Pre-Sale Availability of Written
Warranty Terms (16 C.F.R. Part 702); Informal Dispute Settlement Procedures (16 C.F.R.
Part 703).
8 A rule or guide applies to online activities if its
scope is not limited by how claims are communicated to consumers, how advertising is
disseminated, or where commercial activities occur. As needed, the Commission will amend
or clarify the scope of any particular rule or guide in more detail during its regularly
scheduled review. The Commission has a program in place to periodically review its rules
and guides to evaluate their continued need and to make any necessary changes.
9 16 C.F.R. § 435.2(a).
10 16 C.F.R. § 255(b).
11 As explained in the FTC’s Deception Policy Statement, an ad is
deceptive if it contains a statement—or omits information—that is likely to
mislead consumers acting reasonably under the circumstances and is "material" or
important to a consumer’s decision to buy or use the product. See FTC Policy
Statement on Deception, appended to Cliffdale Associates, Inc., 103 F.T.C. at 174
("Deception Policy Statement"). A statement also may be deceptive if the
advertiser does not have a reasonable basis to support the claim. Advertising Substantiation Statement. See
FTC Policy Statement on Advertising Substantiation, appended to Thompson Medical Co.,
104 F.T.C. 648, 839 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986), cert. denied, 479
U.S. 1086 (1987).
12 Before disseminating an ad, advertisers must have
reasonable support for all express and implied objective claims that the ad conveys to
consumers. When an ad lends itself to more than one reasonable interpretation, there must
be substantiation for each interpretation. The type of evidence needed to substantiate a
claim may depend on the product, the claims, and what experts believe is necessary. If an
ad specifies a certain level of support for a claim—"tests show x"—the
advertiser must have at least that level of support.
13 According to the FTC Act, 15 U.S.C. § 45(n) and
the FTC’s Unfairness Policy Statement,
an advertisement or business practice is unfair if it causes or is likely to cause
substantial consumer injury that consumers could not reasonably avoid and that is not
outweighed by the benefit to consumers or competition. See FTC Policy Statement on
Unfairness, appended to International Harvester Co., 104 F.T.C. 949, 1070 (1984).
14 Copy tests or other evidence of how consumers
actually interpret an ad can be valuable. In many cases, however, the implications of the
ad are clear enough to determine the existence of the claim by examining the ad alone,
without extrinsic evidence.
15 For example, if an endorsement is not representative
of the performance that consumers can generally expect to achieve with a product,
advertisers must disclose this fact so that consumers are not misled. Guides Concerning the Use of Endorsements and
Testimonials in Advertising, 16 C.F.R. § 255.2.
16 For example, any solicitation for the purchase of
consumer products with a warranty must disclose the text of the warranty offer or how
consumers can obtain it for free. Pre-Sale Availability of Written Warranty Terms, 16
C.F.R. § 702.3.
17 For example, the required energy efficiency
disclosures in the Appliance Labeling Rule, 16 C.F.R. § 305.4, further the public
policy goal of promoting energy conservation.
18 Some rules and guides, as well as some FTC cases, use
the phrase "clearly and prominently" instead of "clearly and
conspicuously." These two phrases are synonymous.
19 Deception
Policy Statement at 175-76.
20 Deception
Policy Statement at 178.
21 Deception
Policy Statement at 180-81.
22 Web pages can vary in length, and one Web page may be
the equivalent of many printed pages.
23 In some cases, the details about the additional fees
might be too complex to describe adjacent to the price claim and may be provided by using
a hyperlink. But, a clear statement about the existence and nature of the extra fees
should appear adjacent to the price. Of course, all cost information should be presented
to consumers at the time of purchase. Consumers should understand the exact amount they
will be charged and should not have to learn this information by clicking on hyperlinks.
24 Asterisks and other symbols also are used in
different ways on Web pages, which may confuse consumers as to where the related
disclosure may be found. Some online asterisks and symbols are hyperlinks that
click-through to a separate page and others are static, referring to a disclosure at the
bottom of the page.
25 This approach is consistent with Commission policy
for disclosures in other media. For example, the Commission has required fuller
disclosures in print ads and a shorter disclosure in a short television ad with a referral
to another location for more complete information. See, e.g., Nutri/System, Inc.,
116 F.T.C. 1408 (1993) (consent order requiring a shorter disclosure for 15 second
television ads).
26 Web sites may display differently depending on the
browser, computer screen, or other information appliance used. Advertisers may be working
with a default view, but also evaluating different display options so that the site will
be attractive and accessible to most consumers. Considering different display options also
may be necessary to ensure that qualifying information is displayed clearly and
conspicuously. Evaluating the prominence of the disclosure in relation to the rest of the
ad helps ensure that consumers are able to view the disclosure.
27 See, e.g., Kent & Spiegel Direct, Inc., 124
F.T.C. 300 (1997); Synchronal Corp., 116 F.T.C. 1189 (1993) (consent orders requiring
disclosures to be repeated during television infomercials).
28 For example, the Commission specifically amended the
Textile Rules’ requirement to disclose textile origin in "print" catalogs
to clarify that these disclosures must be made in online catalogs as well. See 63
Fed. Reg. 7507 (Feb. 13, 1998) or http://www.ftc.gov/os/1998/9802/textile.htm
for a discussion of the amendments to the Rules and Regulations Under the Textile Fiber
Products Identification Act, 16 C.F.R. Part 303.
29 16 C.F.R. § 305.1(d).
30 16 C.F.R. §§ 305.2(m), 305.14.
31 Mail or Telephone
Order Merchandise Rule, 16 C.F.R. § 435.1(b).
32 Rule Concerning Use of Prenotification Negative
Option Plans, 16 C.F.R. § 425(a)(2).
33 Disclosure of Written Consumer Product Warranty Terms
and Conditions, 16 C.F.R. § 701.3, and Pre-Sale Availability of Written Warranty
Terms, 16 C.F.R. § 702.3. According to the Rule Regarding Pre-Sale Availability of
Written Warranty Terms, an alternative to making the warranty terms available prior to
purchase is for sellers to provide information about how consumers may obtain the written
warranty for free by mail. 16 C.F.R. § 702.3(c)(2).
34 16 C.F.R. § 310.6. The Telemarketing Sales Rule prohibits deceptive and
abusive telemarketing practices. Among other things, it requires that certain information
be disclosed in telemarketing calls. The scope of the Rule does not extend to transactions
that take place entirely online. The sales transaction must involve a traditional
voice telephone call. See 60 Fed. Reg. 30,406, 30,411 (June 8, 1995). In
addition, in most situations, the Rule does not apply if a consumer calls a business in
response to an advertisement. However, if a consumer calls a business in response to a
"direct mail" advertisement, that call is subject to the Rule.
35 The telephone call may be exempt from the Rule’s
coverage if the direct mail piece contains certain disclosures, such as the total cost to
purchase the goods or services.
36 Whether certain types of online ads, such as targeted
banner ads or personalized solicitations on Web sites, constitute direct mail should be
evaluated on a case-by-case basis.
37 A small number of telemarketing transactions relating
to specific types of goods or services are covered by the Telemarketing Sales Rule, regardless of the
advertising method or manner in which the telemarketing calls were initiated. For example,
credit repair services and advance fee loan services sold through telemarketing are
covered by the Telemarketing Sales Rule,
regardless of whether the consumer called in response to a direct mail piece, television
advertisement, or Web site. 16 C.F.R. § 310.6(e) and (f).