I wonder how many of the businesses would fail in any of this?
http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.shtmlFacts for Business
Dot Com Disclosures
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,
-
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.
- 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.
-
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.
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
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.
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.
- Display
disclosures prominently so they are noticeable to consumers. The size,
color, and graphics of the disclosure affect its prominence.
- 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.
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
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.
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 /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 /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 /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).
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive, and
unfair practices in the marketplace and to provide information to
businesses to help them comply with the law. To file a complaint or to get free information on consumer issues, visit ftc.gov
or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY:
1-866-653-4261. The FTC enters Internet, telemarketing, identity theft,
and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
May 2000