Is Your Ad Legal? Digital Advertising Raises Additional Issues for Marketers

While a strong online presence benefits both businesses and customers, it creates a host of legal issues for businesses and their online marketing strategies. As new technology continues to emerge, new issues will arise and, as a result, businesses that choose to engage in digital advertising will need to remain vigilant of, and current with, new and revised regulations.

Regardless of the advertising medium utilized by a business, the general principals of advertising law apply. The Federal Trade Commission (FTC) is the federal agency tasked with the responsibility of enforcing consumer protection laws. The primary statute relied upon by the FTC in this area is the FTC Act, a federal law that contains a very broad prohibition of the use of “unfair or deceptive acts or practices” in sales methods, advertising claims, and marketing and promotional activities.

The FTC has undertaken, and will continue to undertake, enforcement actions in an effort to impose this prohibition on the use of unfair or deceptive acts or practices, and ensure the truthful marketing of products and services by businesses. Several recent enforcement actions have focused less on traditional print advertising and more on digital advertising.

One of the primary issues in the analysis of any advertising material is the disclosure of details. Advertisers are required to include certain disclosures (i) when the advertised offer is likely to be misleading without the disclosure of such details or (ii) when required by certain regulatory or guidance authority. A classic example of an advertisement requiring such disclosures is that of a home security system for $XX.XX per month, when, in reality, a customer would also need to purchase multiple cameras and other products or services. The mere advertisement of the monthly service fee is likely to be misleading if, in order to get that monthly service rate, a customer is also required to purchase or incur significant additional charges beyond the basic advertised cost.

Regardless of the form of the advertisement, the disclosure of the qualifying details for the advertised offers are key to the legitimacy (and legality) of an advertisement. Such disclosures need to be made in a clear and conspicuous manner. In traditional print advertising, these disclosures are typically found in the fine print footnotes at the bottom of the advertisement. Radio disclosures are typically read before or immediately following the advertisement, and television ads are read and/or superimposed upon the screen.

When it comes to digital advertising, however, the issues become somewhat more complex. The key to any disclosure is that it be easily accessible and likely to be read by the consumer. The space limitations of mobile devices and web pages, and the use of hyperlinks and pop-ups, all make the clear and conspicuous analysis slightly more challenging. To assist businesses in the truthful advertising and marketing of their products or services, the FTC has updated its 2000 guidance entitled .com Disclosure: How to Make Effective Disclosures in Digital Advertising (opens as a PDF), which addresses how the basics of advertising law will be applied to new technologies that have been developed since the original publication of this guidance in 2000. This revised document confirms that when evaluating whether a particular disclosure is clear and conspicuous, the FTC will consider:

1. The placement of the disclosure in the advertisement and its proximity to the claim it is qualifying;
2. The prominence of the disclosure;
3. Whether the disclosure is unavoidable;
4. The extent to which items in other parts of the advertisement might distract attention from the disclosure;
5. Whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure;
6. Whether disclosures in audio messages are presented in an adequate volume and cadence, and visual disclosures appear for a significant duration; and
7. Whether the language of the disclosure is understandable to the intended audience.

The application of these factors to digital advertisements often poses challenges for online advertisers. For example, when analyzing the proximity of a disclosure in a print ad, the analysis might focus on how far from the actual claim the disclosure is located. In digital ads, by contrast, if the disclosure is not included in the same screen shot and, as a result, a consumer would need to scroll down to the bottom of the page to see the disclosure, is it really disclosed in a clear and conspicuous manner? This becomes an even bigger issue when mobile devices are taken into consideration, as disclosures that may appear in the same screen shot on a standard desktop view may require significant vertical or horizontal scrolling on a mobile device.

Digital advertisements provide the opportunity to make disclosures through the use of hyperlinks. Although making disclosures through hyperlinks may not be the best practice for all situations, hyperlinks can provide a useful means to access disclosures that are not integral to the triggering claim. If, however, the disclosures are an integral part of the claim or are inseparable from the claim, hyperlinks should not be used. If hyperlinks are appropriate, advertisers should take special care to make sure the hyperlink is labeled clearly and conspicuously and gives consumers a reason to click on it.

This article is intended to be an overview of the issues discussed herein. It is not intended as legal advice and should not be relied upon as such. If you or your business is engaged in, or is considering, a digital advertising campaign, it is recommended that you consult with legal counsel who is familiar with the relevant legal requirements of your industry and, specifically, the advertisement of your products or services.

John C. Norling is an attorney at Phoenix-based law firm Jennings, Strouss & Salmon. Reach him at Jnorling@jsslaw.com.