Careful Consideration is Advised, as FTC’s Guidance May Inform Federal and/or State Enforcement Actions
Comments Deadline: July 11, 2011
This post was written by Christopher G. Cwalina, Amy S. Mushahwar, and Frederick Lah.
The Federal Trade Commission (“FTC”) seeks public comment, as it considers updating and reissuing “Dot Com Disclosures: Information about Online Advertising”, its business guidance document for online marketers on how to provide clear and conspicuous disclosures to consumers.
In its request for comment, the FTC cites the dramatic changes in the online world since the guidance was originally published in 2000, particularly the emergence of mobile marketing, the “App” economy, the use of “pop-up blockers,” and online social networking. (This recognition of mobile is particularly important in light of last week’s letter by Senator Al Franken (D-MN) to Google (maker of the Android) and Apple (maker of the iPhone and iPad) asking that all mobile apps for their devices provide “clear and understandable privacy policies.”)
Even though the “Dot Com Disclosures” are considered guidance and not formal regulations, the FTC has used its Dot Com Disclosures to inform Section 5 enforcement actions. For example, in a consent order with Advertising.com, Inc., the FTC required that Advertising.com’s representations about its advertisements be made “clearly and prominently.” The definition of “clearly and prominently” was cited almost verbatim to the definition of the term as it appears in the guidance. The FTC also cited to the guidance back in 2002 in response to a complaint brought by Commercial Alert against search engines like AOL and Microsoft for their allegedly misleading disclosures about the advertisements placed on search result lists. State courts have also cited the guidance. In 2009, a Texas court stated that in determining what constitutes deceptive conduct under Texas’ Unfair Trade Practices Act, “they are to be guided by the interpretations of that term in the guidelines of the FTC” and found that those guidelines require that disclosures must be “clear and conspicuous” based on the placement of the disclosure on the webpage and its proximity to the other relevant information.
The FTC seeks comment from the industry on a number of issues. In the request for comment, the FTC provides a series of questions to help companies consider what type of revisions need to be made, such as:
- What issues have been raised by new online technologies, Internet activities, or features that have emerged since the business guide was issued (e.g., mobile marketing, including screen size) that should be addressed in a revised guidance document?
- What issues raised by new laws or regulations should be addressed in a revised guidance document?
- What research or other information regarding the online marketplace, online advertising techniques, consumer online behavior, or the effectiveness of online disclosures should be considered in a revised guidance document?
- What specific types of online disclosures, if any, raise unique issues that should be considered separately from general disclosure requirements?
- What guidance in the original “Dot Com Disclosures” document is outdated or unnecessary?
- What guidance in “Dot Com Disclosures” should be clarified, expanded, strengthened, or limited?
- What issues relating to disclosures have arisen from multi-party selling arrangements in Internet commerce, such as (1) established online sellers providing a platform for other firms to market and sell their products online, (2) website operators being compensated for referring consumers to other Internet sites that offer products and services, and (3) other affiliate marketing arrangements?
Regardless of how the guidance is ultimately revised, the FTC will certainly continue to use this sort of guidance to inform its enforcement efforts. We recommend that companies carefully review the Dot Com Disclosure guidance and questions posed in the request for comment. Companies should analyze how any new guidance might affect their advertising practices and consider whether they should provide comments. July may seem like several weeks away, but because these issues are likely to impact advertising for multiple product lines within your company, we encourage you to begin an internal dialogue on this proceeding immediately.