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TMT Law Watch Business, legal, and policy developments affecting the telecom, media, and technology sector.

Online Advertising Guidance Updated by FTC

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By Brian McCalmon and J. Bradford Currier

The Federal Trade Commission has updated its primary business guidance for online advertising, “.com Disclosures: How to Make Effective Disclosures in Digital Advertising.” The update to the guidance, which had not been revised since 2000, addresses the emergence of new electronic media and communications protocols over the last 13 years and compliance with the FTC Act’s requirement that ads be truthful and not misleading, adequately substantiated, and not unfair. Each of these mandates can require the disclosure of qualifying information in a manner that the FTC intends to be “clear and conspicuous” – i.e., easily accessed and understood by the consumer.

With the emergence of smartphones, tablets, and social media, the form and placement of adequate disclosures has become more complicated than it was over a decade ago. For example, with their smaller screens, smartphones can complicate the task of ensuring that a necessary disclosure is clear and conspicuous. The same goes for ads on social media outlets such as Facebook or Twitter that may impose space constraints on advertisers (such as Twitter’s character number limitation). With its updated guidance, supported by 22 appended examples, the FTC renews its call for advertisers either to ensure that disclosures satisfy the FTC Act and rules, or to refrain from using the medium if adequate disclosures cannot be provided.

The updated guidance reflects the FTC’s recent focus on social media and consumers’ growing reliance on wireless devices to access Internet services. Although FTC guidelines do not have the legally binding effect of regulations, they are intended and considered to be highly reliable statements of the FTC’s enforcement intent; once issued, companies ignore them at their own, potentially significant, peril.