Web Advertising: Steer Clear of Deceptive Claims

If your company advertises on the Internet, keep in mind that the Federal Trade Commission is watching and going after companies with online ads that it doesn't consider truthful and substantiated.

By its nature, the Internet combines aspects of print, television and radio, giving consumers a multi-media, interactive environment. This raises advertising issues that are unique even though the same FTC standards apply to online ads as they do to more traditional media. The guiding principle is truth and substantiation of claims.

Sounds easy enough. But when it comes down to the legal requirement of "clear and conspicuous" disclosure, it gets complicated.

Some online ads use only text while others are a combination of text, graphics, video and audio. To the FTC, the key is the overall impression the ad makes. The commission urges advertisers to adopt the stance of a reasonable consumer and remember that people don't generally read an entire Web site any more than they read every word on printed pages.

Typically, print ads disclose key material in small print at the bottom. This information is at the end of television or radio commercials. Online, you can choose between:

• Proximity. Place disclosures as close to the ad as possible -- on the same screen if space allows. Provide visual cues to get the consumer to scroll down if the material is at the end of a multi-screen page.
• Prominence. Being subtle doesn't work -- the disclosure must be obvious. Take a look at the size, color and graphic treatment of the disclosure in relation to the rest of the screen. Make them large enough and accessible from every appropriate page on the site.
• Distractions. Watch the text, graphics, links and sound so they don't distract the consumer's attention from the disclosure.
• Audio and video. Use audio disclosure for audio ads and video disclosure for video ads, similar to traditional commercials. The volume and cadence must allow consumer to understand. Not all computer users have speakers or video capacity, so don't put disclosures only in these clips.
• Language. Make it clear. Remember, a reasonable consumer -- not a specialist -- has to understand the ad.
• Customer Reviews. See the below for more information.
• Scrolling. Use text or visual cues to encourage scrolling to find disclosures and be specific. For example, "See below for important details about our product." Regulators don't like anything that discourages scrolling, such as leaving blank space at the bottom of one page, with the disclosures on the following page.
• Hyperlinks. Take consumers to a disclosure through a link (see below) but the FTC warns that key data about health, safety and cost should be on the same page as the claim.
• Banner ads. Banners don't always have to contain disclosure. It may be enough to put the information on the page the ad links to. The FTC considers the effectiveness of the linked page and how hard it would be to fit the disclosure into the banner.

Carefully follow the FTC guidelines when designing Internet sales efforts. If you're unsure about meeting the regulations, get legal advice or an opinion letter from the FTC.

One Case FTC Involving Product Reviews

A public relations agency hired by video game developers settled FTC charges that it engaged in deceptive advertising by having employees pose as ordinary consumers posting game reviews. The reviewers did not disclose that the opinions came from paid employees working on behalf of the developers. (FTC File Number 0923199)

"Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising," said Mary Engle, Director of the FTC's Division of Advertising Practices. "Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers."

In its revised endorsements and testimonials guides, the FTC specifies that while decisions will be reached on a case-by-case basis, the online post by a person connected to the seller, or someone who receives cash or in-kind payment to review a product or service, should disclose the material connection the reviewer shares with the seller of the product or service. This applies to employees of both the seller and the seller's advertising agency.

Making the Link

The FTC allows linking to disclosure material, if you:

• Make the link obvious.
• Place the link close to the claim.
• Use consistent hyperlink styles so consumers know when a link is available.
• Describe the importance, nature and relevance of the disclosure.
• Make sure the link leads directly to the disclosure.
• Monitor click-through rates to ensure consumers are getting the disclosure.