By Camille Calman, Davis Wright Tremaine LLP
In March 2013, the Federal Trade Commission issued the first revision of its Dot Com Disclosures since that guide's original publication in May 2000. Both the original and the revised documents provide guidance for advertisers on complying with FTC rules on avoiding false and misleading advertisements. But there are important differences between the two versions. In technological time, 13 years is several lifetimes, and the revamped guide focuses on issues that did not exist in 2000, such as advertising via social media and mobile devices.
This article summarizes the key updates to the Dot Com Disclosures and provides some helpful tips for creating ad campaigns, particularly utilizing social media, that comply with the FTC's guidance. Like all FTC guidance, the publication does not have the force of law, but rather creates a safe harbor for advertisers seeking to avoid FTC scrutiny.
The original Dot Com Disclosures, subtitled “Information About Online Advertising,” dates backs to May 2000.1At the turn of the millennium, most Americans who accessed the internet from home did so over a dial-up phone line connected via modem to a desktop or laptop computer. Cellphones did not offer internet access or even color displays. The phrase “social media” had not yet been coined. Pioneering (but now-unfashionable) social media sites such as Myspace and Friendster had not yet been invented. Mark Zuckerberg was a high school student. Tweeting was for birds.
The consumer-facing World Wide Web was, if not in its infancy, still in its early days, and the FTC wanted to make clear to advertisers that the agency's jurisdiction extended to the brave new world of banner ads, pop-ups, and hyperlinks. The original Dot Com Disclosures provided straightforward explanation of how the FTC would apply its then-existing disclosure standards to online advertising and what the FTC would look to in cyberspace for determining whether such advertising was false or misleading under the FTC Act.
The overarching message of the original Dot Com Disclosures was that the FTC's traditional views about disclosures were the same regardless of whether the medium was print, television, radio, or the internet.2 Then, as now, however the advertiser chooses to address its customers, it must make sure that (1) all relevant information is disclosed, and (2) all disclosures are clear and conspicuous.3
In the original guidance, the FTC focused on disclosures that appeared on separate pages or that were available only via hyperlink. The agency urged advertisers to:
By 2011, the FTC recognized that although the underlying message of the Dot Com Disclosures remained valid, the rules themselves needed an update to reflect technological innovation, including the facts that many consumers now access the internet on mobile devices; use software to block pop-up ads; and view advertising mixed with posts from friends on social media sites such as Facebook, Twitter, and Pinterest.
In preparation for the overhaul of the Dot Com Disclosures, the FTC solicited comments from the public during three public comment periods and hosted a public workshop in May 2012.9 In March 2013, it released the new .com Disclosures, now subtitled “How to Make Effective Disclosures in Digital Advertising,” a titular nod to the breadth of new media beyond the personal computer.10
There are no major surprises in the revised .com Disclosures. The FTC reiterates that it will continue to apply the same policies no matter what the advertising format or media.11 Wherever an advertisement runs, it must be truthful and nonmisleading, and any disclosures required to make it so must be clear and conspicuous based on the net impression of the ad—which means proximity of the disclosures to the claim they modify, their prominence in the ad, their understandability, their presentation free from distractions, and their appearance for a sufficient duration.12
But the revised publication does clarify the FTC's position that the limited real estate available on mobile devices or social media does not relieve advertisers of the burden of including clear, conspicuous disclosures. The FTC takes a hard line: If the space constraints of a cellphone screen or the 140-character maximum length for tweets preclude effective disclosures (including potential hyperlink disclosures), then the ad cannot run in that medium.13 Indeed, disclosures that may pass muster on a full-size desktop computer monitor may still be problematic, because many consumers will view them on a small mobile-device screen. Accordingly, the FTC expects advertisers to consider the full range of devices on which their ads will be viewed.14 Advertisers are also required to “keep abreast of empirical research about where consumers do and do not look on a screen” in laying out copy and related disclosure.15
For advertisers preparing an online or social media campaign, the key takeaways from the new .com Disclosures include:
The new .com Disclosures also offers specific guidance for social media. For instance:
The new .com Disclosures ends with a series of examples, including examples involving social media.
The FTC has not yet taken any actions against advertisers who have violated the principles of the new .com Disclosures.
The .com Disclosures offer useful guidance for advertisers planning a social media advertising campaign. But even a campaign that complies with this guidance can still be false or deceptive if it otherwise falls short of FTC expectations. Advertisers should consider the following potential pitfalls beyond the .com Disclosures when creating ad campaigns for social media.
In 2009, the FTC issued a revised version of its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) that clarified the agency's policy on social media advertising.35 The Endorsement Guides make clear that if a celebrity is paid to endorse a product or service on social media, that relationship must be disclosed because “consumers might not realize that she is a paid endorser.”36 Any other material connection, such as the provision of free products, must also be disclosed.37 The other provisions of the Endorsement Guides apply to social media as they would to any other type of endorsement: The endorser must be a bona fide user of the product or service;38 cannot make false or unsubstantiated statements about the product or service;39 and, if the endorser discloses a personal experience (for instance, a particular amount of weight loss), the endorsement must disclose what a typical consumer result would be.40 The Endorsement Guides must be looked to in conjunction with the .com Disclosures when creating testimonial advertising campaigns.
The National Advertising Division (NAD) of the Better Business Bureau has had several occasions to review social media advertising campaigns. For instance, in October 2011, NAD reviewed a “like-gated promotion” by online vision supplier Coastal Contacts Inc. on Facebook. A “like-gated” promotion is one that provides a benefit for consumers (in this case, a free pair of glasses) in return for “liking” the advertiser's Facebook page.41 The challenger, 1-800 Contacts, argued that by encouraging users to “like” its Facebook page by offering free glasses without sufficiently disclosing the terms, the advertiser was artificially inflating the popularity of its Facebook page. The challenger wanted the advertiser to remove the “likes” it received as the result of what it considered a deceptive promotion. The NAD found “no evidence in the record that Coastal obtained its ‘likes' through misleading or artificial means,” and did not require it to remove the “likes.”42 It cautioned, however, that it might have reached a different result if Coastal Contacts had received its “likes” from consumers, but not held up its end of the bargain.
In August 2011, the NAD reviewed a Twitter campaign for golf ball manufacturer Bridgestone Golf Inc. that included the use of the hashtag “#1BallFitter.”43 All Twitter hashtags begin with the hash, or number, sign—but the challenger argued that this particular hashtag was a superiority claim that Bridgestone was the “number one ball fitter”—meaning it had performed the most golf ball fittings, had the most golf ball fitting experience, and/or had the most comprehensive ball fitting program. The NAD found it reasonable to assume that consumers would understand the “#1BallFitter” hashtag to convey a “Number 1” claim. However, the NAD also found that the advertiser had a reasonable basis for its claim and so did not require modification.44
In September 2012, the NAD reviewed a campaign on Pinterest by Nutrisystem Inc.45 The campaign, called “Success Stories,” invited real users to post their weight-loss stories to the Pinterest board—but because the stories featured atypical results, without disclosure of what a typical result would be, the NAD determined that it ran afoul of the FTC Endorsement Guides and recommended that Nutrisystem add clear and conspicuous disclosures of what results consumers could typically expect.46
Facebook Inc. and Twitter Inc. also have their own guidelines for advertising campaigns on their websites.47 For instance, ads on Facebook “may not imply a Facebook endorsement or partnership of any kind.” Facebook has particularly strict rules for promotions and contests held via Facebook, including that all contests must be administered by using a Facebook app.48 Twitter asks advertisers that sponsor sweepstakes to “[d]iscourage the creation of multiple accounts” and “[d]iscourage posting the same Tweet repeatedly.”49
As The New York Times pointed out in a recent article, advertisers on social media websites run the risk that their ads will appear alongside content that may be objectionable—such as pages advocating violence against women.50 Twitter now offers a “negative match” option that will help advertisers avoid their messages being placed in the context of certain words or phrases.51 Facebook avoids placing ads on pages that have been flagged as controversial, but does not seek out such pages to flag.52 Advertisers should think carefully about what words, phrases, and types of content they want to avoid.
Advertisers should not allow their employees to use social media to review or “like” the advertisers' products, or to post negative reviews of a competitors' products. For instance, in 2010, public relations firm Reverb Communications Inc. settled charges with the FTC that its employees had posed as consumers to post positive reviews of video games sold by the company's clients on the iTunes store.53 Similarly, in 2009, a cosmetic surgery company called Lifestyle Lift settled with the New York attorney general over charges that its employees created false positive reviews on websites and online message boards.54 Companies should consider addressing such behavior as part of their employee handbooks or create a separate, comprehensive social media policy for employees.
Social media can be an effective way for companies and brands to interact with their consumers. But advertisers should not expect that the informal nature or space constraints of social media will absolve them of their obligations to make sure their advertisements are truthful and nonmisleading.
Camille Calman is an associate in Davis Wright Tremaine LLP's New York office who has handled a range of cases, including false advertising, trademark infringement and dilution, copyright infringement, and libel. She also counsels clients on sweepstakes law, intellectual property issues, privacy and security concerns, and libel and other issues related to news-gathering and publishing.
©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.
This document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).