FTC Updates Ad Regulations to Enforce Full Disclosure Across Platforms

FacebookTwitterLinkedIn

Marketers beware: think carefully before placing promotional messages that require disclosures or disclaimers to avoid being deceptive or unfair, according to new regulations announced by the Federal Trade Commission (FTC).

The FTC has revised its Dot Com Disclosures guide to reflect the rise of mobile platforms, leaving no room for lack of requisite disclosures even in smaller spaces with finer print. The original guide, released in 2000, pre-dated smartphones, tablets and mobile—not to mention the dominance of social media as a marketing platform.

The new guidelines, released Tuesday, emphasize “that consumer protection laws apply equally to marketers across all mediums, whether delivered on a desktop computer, a mobile device, or more traditional media such as television, radio, or print.”[more]

If a disclosure is needed, it must be clear and conspicuous, avoid using hyperlinks for disclosures that involve product cost or health and safety issues and include labeling of hyperlinks as specific as possible. The FTC says it’s best to not have to scroll to a disclaimer, that they should be displayed before a decision to buy (“add to shopping cart”) offer and discourages the use of pop-ups for disclosures.

“Many of the themes about social media were already surfaced (by the FTC) a few years ago,” said Eric Goldman, Professor of Law and Director of the High Tech Law Institute at Santa Clara University School of Law. “The guidelines don’t have the force of law. But the FTC is trying to let industry know what it expects industry to do, and when the industry doesn’t do what the FTC wants, the FTC tends to get cranky.”

As the FTC explained in a blog post on its updated truth-in-advertising rules,

The most important thing about the new .com Disclosures is what hasn’t changed. Consumer protection laws still apply across the board to print, radio, TV, and online advertising. Innovative digital promotions may grab the headlines, but advertisers shouldn’t lose sight of the old-school standards. Like Don Draper’s grey flannel suit on Mad Men, Section 5 of the FTC Act is a timeless classic that supersedes the fashions of the day. Regardless of how or where you market, well-established truth-in-advertising principles apply.

As the FTC doesn’t pursue criminal cases, only civil ones, “errant tweeters can be sued but not jailed,” notes The Wall Street Journal. “A fine could be on the cards, or the case could be concluded with some kind of agreement or enforcement order, requiring the advertiser to stick to the guidelines and face a harsher penalty if they don’t.”

WSJ reports that the FTC has also provided some hypothetical examples that demonstrate poor practices, including a Twitter example: “Shooting movie beach scene. Had to lose 30lbs in 6 wks. Thanks Fat-away Pills for making it easy. Typical loss: 1lb/wk. #Spon.” The FTC points out that the abbreviated use of “#Spon” to indicate a sponsorship may be unclear to consumers.

With a global mobile ad market predicted to reach $11.4 billion this year and $24.6 billion by 2016, social media marketers and platforms are aggressively refining and testing controversial advertising options to increase profits.

When the Wall Street Journal asked Twitter to respond to the FTC’s new rules in light of its booming promoted tweets business, “a Twitter spokesman pointed to posted company policies that say advertisers must comply with all legal requirements. Twitter’s policies say advertisers must comply with all legal requirements, and the company’s written ad guidelines highlight industries—including pharmaceuticals, tobacco and weight-loss remedies—that have “legal, cultural or safety restrictions.”

What’s more, WSJ added, “Twitter has found ways to incorporate disclosure requirements into short Twitter ads. In 140-character ads for political candidates or other direct political ads, Twitter designates them with a purple box and when a user hovers his mouse over the box, it shows a disclosure about who paid for the ad. That setup is intended to hew to requirements of the Federal Election Commission.”

The FTC move comes as the leading social marketing platforms are stepping up to meet marketers’ needs. Facebook has improved its Timeline and News Feed services to become more visual, appealing and brand-friendly. Twitter also just announced, just as Pinterest has done, more robust analytics to woo ROI-hungry marketers to pitch campaigns, brands and products on their platform.

While Twitter doesn’t disclose financial results, research firm eMarketer projects the micro-blogger to generate close to $545 million in ad revenue this year, up from $288 million in 2012, while Facebook posted $4.28 billion in ad revenue for 2012.

There’s no shortage of money to be made for mobile advertisers, as well, with a reported 220 percent spike in advertising, according to an IAB Australia report. A new FTC video this week outlines how the agency’s requirements apply to mobile apps and in-game advertising. As with all things FTC, when it comes to plying the public on social or mobile, let the plier—and the buyer—beware.

FacebookTwitterLinkedIn