Greenberg Traurig Alert
FTC Position on Internet Advertising and Privacy Online
By Shirley Z. Johnson and Jodie Finder
View or download the PDF version of this Alert here.
FTC Internet Advertising Guidelines
By a unanimous vote, the Federal Trade Commission (FTC) recently issued Guidelines for
Internet advertising entitled Dot Com Disclosures. The Guidelines were adopted
after a public comment period and workshop. Their purpose is to emphasize that Internet
companies are subject to the same laws against false advertisements as other businesses
and to explain the method of making disclosures on the Internet. The Guidelines, which are
available at www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.html, are written in
plain English and have links to specific examples.
I. Advertising: What It Is
Advertising is interpreted by the FTC to mean any claim about a product or service. The
claim can be on the Internet, in print (e.g., newspapers, mailers, brochures), on the
radio, television, or in the form of infomercials.
II. Basic Advertising Principles
The FTCs three basic principles of advertising are:
- Truth: The claims must be truthful and not directly or indirectly misleading.
- Substantiation: Advertisers must be able to substantiate their claims with facts.
For example, a claim that a product is effective must be supported by evidence.
- Fairness: Advertisements cannot be "unfair."
An advertiser must carefully consider, in light of the ad as a whole, what claims need
qualification and what to disclose. However, a disclosure cannot cure a false claim.
Instead, a false claim must be modified to ensure that it is true.
III. Disclosures: When Needed
In the following situations, among others, disclosures may be necessary:
- Warranties and guarantees
- Comparative advertising
- Use of the word "free"
- Environmental marketing claims
- Negative option plans
- Endorsements and testimonials
- Foreign language materials
- Franchising and business opportunity ventures
The FTC has also promulgated rules relating to specific industries in which disclosures
must be made, including the following:
- Automobiles and used automobile parts
- Fur, textile, and wool
- Household furniture
- Jewelry, precious metals, and pewter
- Pay-per-call services
- Smokeless tobacco
- Home appliances
- Leather and imitation leather products
- Retail food
- Private vocational and distance education schools
- Home insulation
- Law books
- Nursery industry
- Amplifiers used in home entertainment products
IV. Clear and Conspicuous Disclosures
The Guidelines require that disclosures be placed in a "clear and
conspicuous" manner. To ensure that an online ad meets this requirement, advertisers
should consider how a reasonable consumer would perceive and understand the disclosure in
the context of the whole ad. Advertisers must draw attention to the disclosure by placing
it on the page where a consumer not actively looking for it would find it anyway. The
Guidelines list six factors for advertisers to consider:
A. Placement and Proximity
A disclosure should be located near preferably next to the claim it
qualifies to increase the likelihood consumers will see it and associate it with that
claim. If a disclosure cannot appear on the same screen as a claim, advertisers should
alert consumers with text prompts or through a Web pages visual design to alert them
to scroll down for more information. Further, advertisers should avoid formats where a lot
of blank space on the screen precedes the disclosure.
An integral disclosure should be placed adjacent to the claim, rather than through
hyperlinks, so the reader will view them concurrently. Following are considerations for
- Choice of Label: Because a hyperlinks label affects whether consumers
actually click on it, advertisers should make it patently obvious that the link leads to
further information. Therefore, the link should provide consumers with a reason to click
on it by making it clear that the link is related to a particular claim or product.
According to the Guidelines, merely saying "disclaimer" on the link or using
asterisks or other symbols as signals may be insufficient.
- Consistent Use of Styles: Advertisers should treat hyperlinks consistently within
a single site. For example, if all hyperlinks are underlined, a consumer is unlikely to
recognize italicized text as a hyperlink.
- Placement and Prominence: A hyperlink should be proximate preferably
adjacent to the claim that triggers it.
- Click-Through Page: The page the hyperlink leads to the click-through page
must contain the complete disclosure, and the hyperlink should take consumers
directly to the disclosure. Advertisers should monitor click-through rates and the length
of time visitors spend on a page to evaluate the effectiveness of hyperlinked disclosures.
2. Other Techniques
Following are relevant considerations for evaluating whether other online techniques
- Technological Limitations: Advertisers should be aware that certain browsers will
not support or display frames properly. If advertisers are uncertain a required disclosure
will appear, they should choose alternative techniques.
- Response to Characteristics of Each Technique: To avoid consumers missing pop-up
messages, advertisers should make consumers take an affirmative action e.g.,
clicking "no thanks" to proceed past them.
- Research: Advertisers should conduct research to determine if a particular method
3. Timing of Disclosure
Advertisers must communicate disclosures before the point of purchase. Therefore,
disclosures should be provided before the consumer decides to buy. For example,
disclosures should appear before clicking "order now" or "add to shopping
cart." Consumers may overlook the correlation between a disclosure on the order page
and information viewed several pages earlier.
4. Banner Ads
Advertisers that use banner ads must decide whether to include disclosures in the
banner or on the linked Web site. They should consider such factors as how much
information needs disclosure and how effective the disclosure would be if made on the Web
site. The Guidelines encourage advertisers to be creative in incorporating or flagging
necessary information or in making their banners interactive.
Advertisers have the burden of drawing attention to the disclosures they make. They
should display disclosures prominently through the following:
- Size: Disclosures should be at least as large as the ad copy.
- Color: Disclosures should be in a color that contrasts with the background.
- Graphics: Graphics can make a disclosure more noticeable.
Advertisers should evaluate the above factors in relation to other components of the
Web site. For example, the font size should be appropriate relative to that of the claim
and other text. Furthermore, advertisers should refrain from "burying"
disclosures in long and unrelated paragraphs.
The Guidelines recommend that other parts of an ad should not distract consumers.
For example, flashing images or animated graphics may compromise a disclosures
prominence. Advertisers should consider all of an ads content not just the
disclosures text in evaluating whether visual distractions might have a
The Guidelines recommend repeating a disclosure to increase the likelihood a
consumer will notice and understand it. However, they caution against over-repetition.
Specifically, advertisers should adhere to the following:
- Repeat Disclosures on Lengthy Web Sites: Because consumers can enter a Web site
through the home page, in the middle, or anywhere else without necessarily navigating
through the whole site, advertisers should evaluate whether consumers who view only a
portion of a site will miss important disclosures.
- Repeat Disclosures with Repeated Claims: Where a disclosure is tied closely to a
claim, the disclosure may need to always accompany that claim. Advertisers can use
repeated hyperlinks to accomplish this.
E. Multimedia Messages
Advertisers must heed special considerations for multimedia ads:
- Audio Disclosures: Where a claim is in audio form, the disclosure should air at a
sufficient volume and cadence. Because some consumers lack the technology to receive audio
information, the disclosure should also be visual.
- Visual Disclosures: Visual disclosures should appear for a sufficient duration.
Fleeting disclosures tend to be ineffective.
Disclosures should be in clear language and syntax and should avoid legalese or
V. Specific Issues in Applicability of Rules to Online Advertising
FTC rules and guides that use the terms "written," "writing," and
"printed" may also apply to online activities. The FTC plans to continue to
examine the precise nature of how they apply to e-commerce and online advertising on a
case-by-case basis, as well as via periodic rule and guide reviews. The Commission expects
that most will apply to the Internet industry.
A. Using New Technologies to Comply
Online businesses may use e-mail to comply with a rule or guide to send required
information to consumers. Advertisers can use e-mail where consumers understand or expect
that they will receive information this way. The following specific suggestions may apply:
- Notice to Consumers: Sellers should consider telling consumers they plan to send
delay notices via e-mail.
- Negative Option Plans: Advertisers must ensure that consumers understand the
consequences of not responding to negative option ads, such as book-of-the-month clubs.
- Warranties: Sellers offering warranties can make requisite information available
at the point of purchase by using clearly labeled hyperlinks and presenting the
information in a way that can be preserved, i.e., by downloading or printing.
B. Direct Mail
According to the Guidelines, where e-mail invites consumers to telephone the seller
to make a purchase, both the call and the sale are subject to the Telemarketing Sales Rule
(16 C.F.R. § 310.6). However, online advertisements are not necessarily deemed
"direct mail" solicitations. The FTC assumes that consumers surfing the Web or
reading electronic bulletin board postings understand that what is being sold is being
offered on the same terms to all potential consumers and that the seller has not specially
selected them. Therefore, phone calls that respond to these types of solicitations are not
covered by the Telemarketing Sales Rule.
The FTC will continue to examine Internet advertising under traditional criteria while
remaining cognizant of new technologies. Businesses engaged in e-commerce must remain
aware of these criteria to ensure that their online marketing is not deceptive.
FTC Report on Internet Privacy
The Federal Trade Commission (FTC) recently issued a report entitled: Privacy
Online: Fair Information Practices in the Electronic Marketplace. This is the third
FTC report since 1995 examining the state of Internet privacy and the efficacy of
self-regulation. The Report does the following: (1) presents the results of the
Commissions 2000 Online Privacy Survey; (2) evaluates the recommendations of the
Commission-appointed Advisory Committee on Online Access and Security; and (3) sets forth
the conclusion that legislation is necessary to ensure fair information practices and
recommends a statutory framework.
I. Results of Survey
In February/March 2000, the Commission conducted the 2000 Online Privacy Survey, a
study of the busiest U.S. commercial sites (i.e., those with 39,000 or more unique
visitors each month) on the World Wide Web to assess industrys progress in
protecting consumer privacy. The following are the key findings:
- Collection of Consumer Information: Nearly all Web sites collect
personal identifying information from consumers. More collect e-mail addresses or some
other type of personal identifying information than non-identifying information.
- Privacy Disclosure and Policy: There has been a significant increase in the past
year in the percent of Web sites posting at least one privacy disclosure and a privacy
policy. Some disclosures, however, are related to only one discrete information practice.
- Fair Information Practice Principles: Less than half of the Web
sites that collect personal identifying information at least partially implement the fair
information practice principles accepted for nearly 30 years as necessary to assuring fair
and protective information practices notice, choice, access,
and security. Less than half of the sites help implement a fifth principle
enforcement by displaying the TRUSTe, BBBOnLine Privacy, CPA Web Trust,
or Entertainment Software Ratings Board privacy seals.
- Cookies: Most sites allow placement of cookies by third parties.
II. Recommendations of Advisory Committee
In December 1999, the FTC established the Federal Trade Commission Advisory Committee
on Online Access and Security under the Federal Advisory Committee Act to consider the
parameters of "reasonable access" to personal information collected on consumers
and "adequate security" for such information. The 40-member Committee made the
- Reasonable Access: The Advisory Committee Report presents four options for
defining scope of access: (1) "total access" approach (consumer could access all
personal information to make businesses information practices transparent to
consumers); (2) "default to consumer access" approach (personal information
retrievable in ordinary course of business would be available); (3)
"case-by-case" approach (access would depend on content, holder, source, and
likely use); and (4) "access for correction" approach (consumer could access all
information used to grant or deny significant benefits).
- Adequate Security: The Advisory Committee recommends implementation of an
approach requiring that each commercial Web site have a security program to protect
personal data, that the program specify its elements, and that the program be
"appropriate to the circumstances." The Committee also recommends that a
security disclosure is an appropriate tool to keep consumers informed and to allow them to
make informed choices.
The Commission believes all these options will be useful to Web sites in creating
procedures to facilitate consumer access to personal information collected, and should be
considered in developing parameters.
III. Legislative Proposal
The Report emphasizes the Commissions continued encouragement of
self-regulation, but recognizes the barriers to achieving adequate protections. The
proposed legislation would set forth a basic level of protection for visitors to
commercial Web sites to the extent not already provided by the Childrens Online
Privacy Protection Act (COPPA), and would authorize an implementing agency to promulgate
and enforce more standards. Under the proposal, Web sites would have to comply with the
four widely accepted fair information practices:
- Notice: Web sites would have to provide consumers with clear and
conspicuous notice of their information practices, including: the type of information they
collect; how it is collected; how it is used; how they provide choice, access, and
security; whether they disclose the information collected to other entities; and whether
other entities are collecting the information through the site.
- Choice: Web sites would be required to offer consumers choices as to how their
personal identifying information is used beyond the use for which the information was
originally provided. Such choice would encompass both internal and external secondary
- Access: Web sites would be required to offer consumers reasonable access to the
information a Web site has collected about them, including a reasonable opportunity to
review information, correct inaccuracies, or delete information.
- Security: Web sites would be required to take reasonable steps to protect the
security of the information collected from consumers.
The Commission recognizes that implementation of these practices must be flexible in
order to encompass the variety of information collected and the uses for that information,
as well as to adapt to new technology.
© 2000 Greenberg Traurig
This GT ALERT is issued for informational purposes only and is not intended
to be construed or used as general legal advice. Greenberg Traurig attorneys provide
practical, result-oriented strategies and solutions tailored to meet our clients’
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