When is the last time you actually read any of the mouse print that flashes on your screen during a television commercial? In many instances, you may not have willingly ignored the disclosure; it is more likely that it was impossible to read. Many commentators and regulators have questioned the value of this kind of illegible disclosure. On September 23, 2014, the Federal Trade Commission (FTC) reasserted its opinions on this matter. Announcing its “Operation Full Disclosure,” the FTC shifted its focus away from social media advertising to traditional advertising. The lessons from Operation Full Disclosure are important, however, for all advertising outlets, including social media advertising. Brands should take note of these lessons and review their disclosure practices.
In the FTC’s press release about Operation Full Disclosure, the agency announced that it had sent warning letters to over 60 companies, including some of the largest advertisers in the United States, because of inadequate disclosures in their television and print ads. The warning letters covered both English and Spanish language advertising for a wide range of products. In particular, the agency scrutinized pricing claims, product performance or capability claims, uniqueness, comparative, or superiority claims, trial period advertising, and testimonials, particularly with weight loss products. In looking at the disclosures in the ads, the FTC announced that it “ensures that consumers can have confidence that the ads they see are not hiding important information.”
Relying on basic advertising law principles, the FTC analyzed advertising to determine if these companies’ disclosure practices were “clear and conspicuous.”
Insufficient disclosures could render the messages misleading, deceptive, or unfair. Accordingly, the FTC referred to its “longstanding guidance to companies …that disclosures…should be close to the claims to which they relate—not hidden or buried in unrelated details.” In determining whether the disclosures are “clear and conspicuous,” the FTC considers the following factors, among others:
- Is the font easy to read?
- Does the disclosure blend visually with the background or is the color different?
- For television ads, are they on screen long enough to be noticed, read, and understood?
- Do other aspects in the ads “obscure or distract from the disclosures?”
The FTC noted in its press release that although Operation Full Disclosure focused on traditional media, it still had an interest in new media. Citing to the 2013 DotCom Disclosure Guides for mobile and online advertisers, the FTC noted that, “Operation Full Disclosure underscores that consumer protection laws apply equally to marketers across all media, whether delivered on a desktop computer, a mobile device, or more traditional media like television or print.”
So why did Operation Full Disclosure only look at traditional advertising? Those of us who follow advertising law have consistently warned that there are “driving rules” for social media speech, despite the speed and viral natures of social media marketing. Perhaps, the FTC felt a need to return to the historical roots of the advertising industry to remind digital actors of their responsibilities. The warning letters serve as a wakeup call that the FTC is paying attention to all kinds of advertising.
Still, in reasserting traditional advertising principles, there could be danger ahead for digital, mobile, and social media marketers. Space-constrained advertising means marketers have to be more creative to comply with the law, but the FTC may be uncomfortable with creativity. It may try to retrofit digital advertising, including emerging trends like native advertising, with traditional advertising principles.
Also noteworthy is the FTC’s comment that it is the consumers’ perceptions that count more than the marketers. If the consumer believes the advertising is hiding important information, it does not matter what the marketer tried to convey. It is crucial, then, that social media teams implement systems for vetting their content before it posts. The legal team can help determine where speed can create exposure. It may even be necessary to have legal on call during important public events, like the Superbowl or the Oscars, so that the brand can keep its social media publishing.
We know that Operation Full Disclosure suggests a continued regulator preoccupation with disclosures. To ensure that your brand is ready, the c-suite should focus the company on risk mitigation by requesting an audit of advertising across multiple practices. Working with your legal team, your marketers should reassess internal policies about disclosures that factor in your bottom line and your risk tolerance. To guarantee that these endeavors are fruitful, make sure that your marketing and legal advisors have an open line of communication, with each group voicing its goals actively. These steps will prepare you and guard against future regulatory action from the FTC or any other regulator.
© Kyle-Beth Hilfer, P.C. 2014
DISCLOSURE: This article does not constitute legal advice. If you have specific legal questions about how to make advertising disclosures, please contact this post’s author or another attorney.