FTC Issues Guidance on Native Advertising

The FTC released in December 2015 an enforcement statement and companion guide for businesses on native advertising, focusing particularly on digital media advertising. The watchword for the guidance is "transparency" -- the commercial nature of an ad is evident, either on its face or through appropriate disclosures. The Enforcement Policy Statement on Deceptively Formatted Advertisements guidance points out, for example, that even if an ad is formatted the same way as content, the commercial nature of the ad may be obvious and not require disclosure. Similarly, sponsored content that does not pertain to a company's products or services would not require full disclosure; however, content that is produced by a publisher, but sponsored by the company and featuring or discussing company products, must be clearly disclosed.

Guidance specific to digital media: 

  • Click-on ads: Disclosures may be necessary on both originating page (including news feed) and clicked page. 
  • Even if content was produced independently, clear disclosures are necessary if content/article is reproduced or "recommended" on other sites in a manner that would appear that recommended content is not a paid ad. 
  • Sponsored videos: Disclosures will generally be necessary if a product is recommended or featured in a way that advertises the product. 
  • Shares and news feeds: Need for disclosures depends on reasonable expectations (e.g., does the post come from the company directly or through a different site or user?) 
  • Paid content coming up in non-paid search results: Disclosures for any link or other visual elements, for example, webpage snippets, images or graphics, intended to appear in non-paid search results must effectively disclose their commercial nature.

In all situations, disclosures must be stated in clear and unambiguous language, placed as close as possible to the native ad, and use a font, color and shade that are easy to read and conspicuous. Video ads must include disclosures that are visible on the screen long enough to be noticed, read and understood, and audio disclosures should be read in clear language and at a cadence that's easy to understand.

FTC's Big Data Report

The FTC released a report titled Big Data: A Tool for Inclusion or Exclusion: Understanding the Issues. The January 2016 report examines how big data is used, after it is collected and analyzed, and outlines questions for businesses to consider in order to help ensure legal compliance (Fair Credit Reporting Act and equal opportunity laws, as well as the FTC Act) and avoid discriminatory or exclusionary impact of their big data policies.

Specifically, the report poses four key policy questions drawn from research into the impact of big data on underserved populations: 

  • How representative is your data set? 
  • Does your data model account for biases? 
  • How accurate are your predictions based on big data? 
  • Does your reliance on big data raise ethical or fairness concerns? 

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