United States: FTC's Updates To "Dot Com Disclosures" Guidance Demonstrates Once Again That The Law Is Constantly Playing Catch Up To Technology

Last Updated: April 8 2013
Article by Matthew S. Adams

In an update to its original guidance piece that came out in 2000 -- when the technology that we use to live, work, and play today seemed like some figment of imagination from one of my favorite childhood cartoons, The Jetsons -- the Federal Trade Commission ("FTC") released " .com Disclosures: How to Make Effective Disclosures in Digital Advertising" (hereinafter, "Dot Com Disclosures") recently.  The FTC's self-described goal in releasing its latest guidance on the subject of disclosures in online advertising was to ". . . take[] into account the expanding use of smartphones with small screens and the rise of social media marketing." (Source: FTC News Release, dated March 12, 2013).  Specifically, as the title of the agency's white paper suggests, Dot Com Disclosures addresses compliance with FTC advertising disclosure requirements when conducting business through the latest generation of internet technology like mobile apps, mobile websites, and social media.

The FTC is the nation's consumer watchdog, tasked with ensuring that our free market system is not manipulated through anti-competitive practices.  While the FTC is involved in combating a number of different unlawful business practices across a multitude of industries, it should come as no surprise that the expansive body of federal consumer protection laws and rules enforced by the FTC applies equally to online commerce just as it does to the traditional bricks and mortar business world.  It should also come as no surprise that the FTC's enforcement efforts appear to have been stepped up against online offenders in recent years due to the ease of operation and anonymity that the virtual world provides.

The most revealing points in the FTC's 2013 version of Dot Com Disclosures are as follows:

1. Where a disclosure is needed to make advertising compliant with the FTC's regulations, according to Dot Com Disclosures, the disclosure must not only be clear and conspicuous, it must be clear and conspicuous when viewed on any of the numerous devices and operating systems that could conceivably be used by today's tech-savvy consumer to view the material.  That means, for example, that the disclosure will have to be clearly and conspicuously visible to the consumer whether viewed on an iPhone, an Android device, or any one of the numerous other gadgets in this rapidly expanding, cutting edge sector of the technology marketplace. 

2. If a disclosure is required in connection with an advertisement pursuant to law, but the disclosure cannot be made because of practical limitations imposed by the technology employed (i.e. screen size or other technical limits), the FTC clearly states that the advertising should not be placed on that medium, and to do  so not withstanding the limitations would constitute an actionable violation of law.  This should cause any business subject to FTC regulation to stop, pause, and consider whether the significant investment associated with some of the latest and greatest forms of mobile internet based advertising are worth it for their business.

The good news is that Dot Com Disclosures is replete with concrete graphic examples of what does and does not constitute an appropriate disclaimer for mobile internet and social media advertising, in an effort to demonstrate that it is not impossible for advertisers to stay compliant.  However, the broader, more systemic issue revealed by the FTC's latest guidance is that the law is constantly playing catch up with technology.  In many instances, traditional legal and regulatory structures, such as the FTC regulations pertaining to disclosures in advertising, are simply re-invented to provide the necessary fix to whatever lapses have developed between the two parallel evolutionary tracks over time.  Yet, in other instances, technological advances require wholesale regulatory reform because the traditional frameworks become so outdated and outmoded that they have become nonsensical.  The FTC's latest guidance piece is just one in a long series of examples of highly impactful legal reforms spurred by technological growth, and is one that advertisers and the agencies that they engage to create their online content ought to pay close attention to.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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