The Federal Trade Commission Steps In
The Federal Trade Commission (FTC) has given you a gift. When was the last time a government agency gave you a gift? Now this gift does not come in a wrapped package with a ribbon, but it is just as valuable because it could protect your reputation, your job, and the reputation of your business or organization.
First, let us start with a message from the FTC.
In an effort to avoid deceptive practices, the FTC issued important “guidelines” regarding disclosure, primarily related to online advertising. These guidelines were updated in 2011 and again in 2013, renaming it .com Disclosures: How to Make Effective Disclosures in Digital Advertising. According to the FTC, “.com Disclosures focuses on the same consumer protection principles, but fast-forwards them to reflect changes in the digital marketplace.”
In the online marketplace, consumers can transact business without the constraints of time or distance. One can log on to the Internet day or night and purchase almost anything one desires, and advances in mobile technology allow advertisers to reach consumers nearly anywhere they go. But cyberspace is not without boundaries, and deception is unlawful no matter what the medium. The FTC has enforced and will continue enforcing its consumer protection laws to ensure that products and services are described truthfully online, and that consumers understand what they are paying for. These activities benefit consumers as well as sellers, who expect and deserve the opportunity to compete in a marketplace free of deception and unfair practices (Federal Trade Commission 2013).
The general principles of advertising law apply online, but new issues arise almost as fast as technology develops—most recently, new issues have arisen concerning space-constrained screens and social media platforms (Federal Trade Commission 2013).
The same consumer protection laws that apply to commercial activities in other media apply online, including activities in the mobile marketplace. The FTC Act’s prohibition on “unfair or deceptive acts or practices” encompasses online 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 the wide spectrum of online activities (Federal Trade Commission 2013).
So there, you have it; the FTC has said that consumer protection laws apply to all forms of media, and this includes social media.
It’s About Disclosure
The FTC guidelines address multiple areas of social media disclosure. While the report provides many specific details about disclosure requirements, the general theme is that organizations must consider the social medium, the technology used to access the information, the visibility of the disclosure, and the accessibility of the disclosure when crafting disclosure statements.
According to the FTC report, disclosures should be obvious, easily accessible, easily understood, and placed in a location that users would normally pay attention. Disclosures should also be repeated if necessary and provided before a user purchases any good or service. The report gives specific guidance as what not to do when writing a disclosure. Absolutely do not include placing a disclosure at the end of a webpage, requiring users to click multiple times to get to the disclosure, or placing the disclosure in an inconspicuous place (Myers 2014).
Disclosure Must Be Clear and Conspicuous
In the .com Disclosure document, the FTC has said that social media endorsements, testimonials, advertisements, and ads on social, digital and mobile media sites must be accompanied by clear and conspicuous disclosure to avoid deceptive practices.
According to the FTC, “It’s the law—and it’s always been the law—that if the disclosure of information is necessary to prevent an online ad claim from being deceptive or unfair, it has to be clear and conspicuous. So, what’s new? According to .com Disclosures circa 2013, advertisers should make sure their disclosures are clear and conspicuous on all devices and platforms that consumers may use to view their ads. That means that if an ad would be deceptive or unfair (or would otherwise violate an FTC rule) without a disclosure—but the disclosure can’t be made clearly and conspicuously on a particular device or platform—then that ad shouldn’t run on that device or platform.”
The new advice, according to .com Disclosures: How to Make Effective Disclosures in Digital Advertising, “. . .disclosures should be ‘as close as possible’ to the relevant claim. The new document calls on advertisers to label hyperlinks as specifically as possible. Another thing to bear in mind: how hyperlinks will function across the broad range of programs and devices consumers are likely to use.”
Examining these new guidelines, four suggestions emerge for marketers: (Myers 2014)
1. Disclosures should be tailored to the structure of certain social media. Twitter disclosures are not the same as blog disclosures because of the structure of the sites.
2. Limited space in social media outlets does not mean an organization is absolved from providing complete disclosure information. If proper disclosures cannot be made in a particular social media outlet, then that site should not be used for promotional materials.
3. When drafting a disclosure, practitioners should think like ordinary social media users. Using jargon, providing information overload, or placing the disclosure in an obscure location that requires scrolling is not evidence of proper disclosure.
4. When writing a disclosure, practitioners should not only consider the limitation of a social media platform but also limitations of technological devices. Users read information in a variety of ways, including on tablets, smart phones, and traditional computers. Practitioners should consider the ordinary use of these and future technologies and anticipate how ordinary users consume information on these devices.
But the disclosure requirement goes well beyond social media and digital “advertisements.” It also applies to posts by everyone from employees, vendors, board members, and anyone with a vested interest in seeing a business succeed.
“In its simplest form, the disclosure requirement means that if you work for a business and you post why someone should buy a product, use the service, or go to the venue, you need to disclose that you work for that business or the relationship you have with that business.” (Myers 2014)
Disclosure Should Be “Clear and Conspicuous”
Andy Sernovitz, author of the book Word of Mouth Marketing, says disclosure can be as simple as “I work for _________ and this is my personal opinion.”
I love how Andy has simplified disclosure to an easy, magical 10 words. These 10 words can keep you and your business on the safe side of the law. Put these into your policy, train your employees and stakeholders to use these words—relentlessly.
Clear and Conspicuous
The FTC says the key is to make sure the disclosure is “clear and conspicuous.” By comparison, you cannot put this disclosure at the bottom of your Facebook page, Twitter page, or your blog. It needs to be associated with each post.
This quote from the FTC should make the agency’s intent perfectly clear: “Don’t hide the ball.” How many times does a government document use that kind of language? The FTC goes on to say that simply including a hyperlink may not be “clear and conspicuous” disclosure.
“Hyperlinks that simply say “disclaimer,” “more information,” “details,” “terms and conditions,” or “fine print” do not convey the importance, nature, and relevance of the information to which they lead and are likely to be inadequate. Even labels such as “important information” or “important limitations” may be inadequate.” (Federal Trade Commission 2013)
Disclosures that are required to prevent an advertisement from being deceptive, unfair, or otherwise violative of a Commission rule, must be presented “clearly and conspicuously.” 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. If a disclosure is not seen or comprehended, it will not change the net impression consumers take from the ad and therefore cannot qualify the claim to avoid a misleading impression (Federal Trade Commission 2013).
Make it Obvious
Choosing the right label for the hyperlink. A hyperlink that leads to a disclosure should be labeled clearly and conspicuously.
Consumers should be able to tell that they can click on a hyperlink to get more information. Simply underlining text may be insufficient to inform consumers that the text is a hyperlink.
The FTC adds: “Don’t be subtle. Symbols or icons by themselves are not likely to be effective as hyperlink labels leading to disclosures that are necessary to prevent deception.” (Federal Trade Commission 2013)
Label the link to convey the importance, nature, and relevance of the information to which it leads. Example: 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. The hyperlink label should use clear, understandable text (Federal Trade Commission 2013).
There is no set formula for a clear and conspicuous disclosure; it depends on the information that 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, or audio, or combinations thereof. Advertisers have the flexibility to be creative in designing their ads, as long as necessary information is communicated effectively and the overall message conveyed to consumers is not misleading ( Federal Trade Commission 2013).
Technology Is Not an Excuse
The FTC addresses technology by telling businesses and organizations they must address these issues in disclosure, not avoid proper disclosure because of technology.
There are special considerations for evaluating whether a technique is appropriate for providing required disclosures. Do not ignore technological limitations. Some browsers or devices may not support certain techniques for displaying disclosures or may display them in a manner that makes them difficult to read. For example, a disclosure that requires Adobe Flash Player will not be displayed on certain mobile devices.
Don’t Use Blockable Pop-Up Disclosures
Advertisers should not disclose necessary information through the use of pop-ups that could be prevented from appearing by pop-up blocking software. Be aware of other issues with pop-up disclosures. Even the use of unblockable pop-ups to disclose necessary information may be problematic. Some consumers may not read information in pop-up windows or interstitials because they immediately close the pop-ups or move to the next page in pursuit of completing their intended tasks, or because they do not associate information in a pop-up window or on an interstitial page to a claim or product they have not encountered yet. However, advertisers can take steps to avoid such problems, for example, by requiring the consumer to take some affirmative action to proceed past the pop-up or interstitial (e.g., by requiring consumers to choose between yes and no buttons without use of preselected buttons before continuing). Research may be useful to help advertisers determine whether a particular technique is an effective method of communicating information to consumers (Federal Trade Commission 2013).
Displaying Disclosures Prior to Purchase
Another important point according to the FTC is that disclosure must be made prior to purchase:
Disclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation. In general, 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 website or mobile application—that is, the consumer will be completing the transaction online—disclosures should be provided before the consumer makes the decision to buy, for example, before clicking on an “order now” button or a link that says “add to shopping cart.” (Federal Trade Commission 2013)
Handling Short-Form Messages
The FTC has addressed the issue of short-form messaging, such as tweets, with very specific guidelines:
Use disclosures in each ad. If a disclosure is required in a space-constrained ad, such as a tweet, the disclosure should be in each and every ad that would require a disclosure if that ad was viewed in isolation. Do not assume that consumers will see and associate multiple space-constrained advertisements (Federal Trade Commission 2013).
Short-form disclosures might or might not adequately inform consumers of the essence of a required disclosure. For example, “Ad:” at the beginning of a tweet or similar short-form message should inform consumers that the message is an advertisement, and the word “Sponsored” likely informs consumers that the message was sponsored by an advertiser. Other abbreviations or icons may or may not be adequate, depending on whether they are presented clearly and conspicuously, and whether consumers understand their meaning so they are not misled. Misleading a significant minority of reasonable consumers is a violation of the FTC Act (Federal Trade Commission 2013).
Some disclosures can be placed at the beginning of a short-form message. Alternatively, if a disclosure is placed at the end of a message, the original message can be written with enough free space that the disclosure is not lost if the message is republished with a comment by others (Federal Trade Commission 2013).
Although online commerce (including mobile and social media marketing) is booming, deception can dampen consumer confidence in the online marketplace. To ensure that products and services are described truthfully online and that consumers get what they pay for, the FTC will continue to enforce its consumer protection laws. Most 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 challenges that may be presented by future innovation. Businesses, as well, should consider these criteria when developing online ads and ensuring they comply with the law (Federal Trade Commission 2013)
Compliance with the FTC guide is voluntary; however, practices that are inconsistent with the FTC guide can be the basis of corrective action taken by the FTC, which could lead to fines—big fines!
Summary
In this chapter, we have provided an overview of the Federal Trade Commission (FTC) social media disclosure guidelines. A business, organization, and/or individual must disclose its relationship to an ad or testimonial and that disclosure must be clear and conspicuous to the average consumer.