2013 Dot Com Disclosures: Explained By Lawyer

2013 Dot Com Disclosures
The new Dot Com Disclosure rules are here! The FTC has a new set of online marketing standards.

Below is an in-depth review of the March 2013 Dot Com Disclosures update. Fair Warning: It is the opposite of short. We’ve done our best to use descriptive headlines to break the monotony and hopefully allow for easier navigation. If you need to speak with an attorney who deals with FTC and online advertising issues, get in touch. Kelly Warner is here to help any and all online marketers.

The Federal Trade Commission updated the Dot Com Disclosures. In April 2012, the nation’s consumer protection agency held workshops to discuss mobile devices and sales disclosures. Now, they’ve released a new set of guidelines. It’s supposed to act as a set of rules for how mobile and social media ads should be structured, but the 53-page Dot Com Disclosure update is actually a lengthy treatise filled with non-committal suggestions.

Regardless of the wishy-washy language, the Dot Com Disclosures are the closest thing we have to an online marketing law. Following the standards within could save you a costly legal battle with the FTC. Below is a rundown of the updated Dot Dom Disclosures. If you dabble in social media endorsements, geo-location or mobile advertising, the new FTC stance and recommendations will likely affect your current digital marketing campaign.

Part Rehash of the Original Dot Com Disclosures

The majority of the newest Dot Com Disclosures is a regurgitation of the previous document. It warns against the evils of “deceptive marketing,” and explains that good marketing is marketing which is truthful, substantiated and fair. The drafters of the document also spend time explaining why both consumers and sellers have a right to an honest marketplace.

While the latest version of the online marketing guide excessively explains the importance of proximity, repetition and prominence when it comes to advertisement disclosures, it does little in terms of presenting definitive answers as  to the exact parameters of what will and will not be tolerated by the commission. Despite an abundance of words, few definitive rules are laid out.

And believe it or not, the FTC is not shy about admitting their non-committal nature. In the new version of the Dot Com Disclosures, it clearly states that the document “is intended only to provide guidance.”

“The ultimate test is not the size of the font or the location of the disclosure, although they are important considerations,” reads the online marketing guidelines, “the ultimate test is whether the information intended to be disclosed is actually conveyed to consumers.”

Justification Against & Repeated Warnings About “Unfair & Deceptive Marketing Practices”

The charge of the Federal Trade Commission is protecting consumers from “unfair and deceptive marketing practices.” As such, they dedicate several paragraphs in the Dot Com Disclosures discussing why fraudulent online ads hurt buyers and sellers. “[Sellers]…expect and deserve the opportunity to compete in a marketplace free of deception and unfair practices” and consumers deserve to “understand what they are paying for” and that “deception can damper consumer confidence” explains the FTC.

In addition to rehashing the perils of questionable marketing tactics, the new Dot Com Disclosures also make clear that the guidelines apply to ads of all types – audio, video, digital, small, large, mobile, Internet. They didn’t bother naming all the possibilities, instead opting for the all-encompassing “not limited to any particular medium used to disseminate claims or advertising.”

General Look & Feel

The new Dot Com Disclosures address how online and mobile ads must be marked, so as to be easily distinguishable as promotional material. Similar to the older version, the new Dot Com Disclosures make clear that the “overall net impression of [an] ad” is more important than then individual aspects. The updated version also warns marketers not to “let other parts of the ad get in the way” of an advertising disclosure. Commissioners specifically mention buy now buttons and flashy shopping carts as potential distraction culprits. The Dot Com Disclosures stress that any disclosures need to be made before the “the decision to buy” is made. Disclosures should also be “displayed early in the decision-making process.”  Therefore, the guidelines seem to suggest that disclosures and other advertorial assets (i.e., a shopping cart or glossy graphic) should be of equal prominence.

The primary point the FTC hammers home: Disclosures should be obvious and unavoidable.

Proximity, Pop-Ups and White Spaces

Proximity is a big deal in the Dot Com Disclosures. The document mentions proximity more than a cookbook mentions eggs. The proximity gist is this: make darn sure any disclosures are near the ad it modifies. The guidelines urge that, when possible, the ads themselves should include relevant limitations within the ad, rather than a separate disclosure.

Pop-Ups

In this iteration of the Dot Com Disclosures, pop-up disclosures are called out by name. Specifically, the commission warns not to use “blockable pop-up disclosures.” So, if you’ve been using standard pop-ups to satisfy disclosure requirements, it may be time to change your methods.

White Space

The issue of “blank white space” is also specifically addressed in the latest version of the Dot Com Disclosures. The new guidelines make note of the deceptive nature of blank white spaces on lengthy sites; the rules urge marketers to repeat claims multiple times on a long website (see below for specifics about scrolling); the new online marketing document also directs advertisers to be mindful of the “multiple routes through a website” and urges marketers to make sure that disclosures are easily seen – no matter where or how a user happens upon an ad.

Teaser Ads

What should you do if you dabble in teaser ads? The FTC has this to offer:

“[In instances of teaser ads] when the advertised product is only sold through advertisers’ own website and the consumer must click through in order to take any action…a space-constrained ad can direct consumers to a website for more information[where the disclosure must be conspicuous].”

The FTC Thinks Hyperlinks Are Very Important

Hyperlinks to detailed disclosures are a popular method. As such, this version of the Dot Com Disclosures painstakingly addresses a myriad of issues related to hyperlinking. The FTC’s message concerning hyperlinks is this: make sure any disclosure links are noticeable, uniform and take users directly to the information they need to make an informed decision. According to the new Dot Com Disclosures, hyperlinks should be recognizable as links and not hidden by other elements on the page or device.

Anchor Text

The appropriate anchor text is also discussed in detail in the new online marketing guidelines. In short, advertisers are advised not to use generic, non-descript words for disclosure hyperlinks. The document specifically says that “hyperlinking a single word or phrase in the text of an ad is not likely to be effective.” It goes on to explain: “hyperlinks that simply say ‘disclaimer,’ ‘more information,’ ‘details,’ ‘terms and conditions’ or ‘fine print’ do not convey the importance, nature and relevance of the information…” In a rare moment of clarity, the Dot Com Disclosures suggest the following as the ideal hyperlink verbiage:

“Service plan required. Get service plan.” The Dot Com Disclosures clearly state that “necessary disclosures should not be relegated to “terms of use” and similar contractual agreements. On other words: don’t try to bury stuff in a tiny TOS link at the bottom of your website and call it a day.

Scrolling Seems To Be Of the Utmost Concern

During the Dot Com Disclosure workshops, participants must have spent a considerable amount of time debating the finer points of scrolling, because the latest version of the online marketing guidelines are filled with scrolling tips and standards.

Below is a list of how the FTC feels about scrolling when it comes to online and mobile advertisements:

  1. Whenever possible, avoid ads that require scrolling in any direction.
  2. Make every attempt to ensure “that scrolling is not necessary in order to find a disclosure.”
  3. “When scrolling is necessary, use text or visual cues to encourage consumers to scroll to view the disclosure.”
  4. The presence of “scroll bars along the edges of a screen are not sufficiently effective visual cue.”

To drive home their anti-scrolling preference, the Dot Com Disclosures also warn advertisers to “keep in mind that having to scroll increases the risk that consumers will miss a disclosure.”

The FTC Essentially says that It’s Your Responsibility to Keep up with the Latest User Behavior Statistics

In addition to making sure that all advertisements and promotional material is clear and conspicuous, the new Dot Com Disclosures also suggest that digital marketers must stay current when it comes to the latest and greatest user behavior studies. Items commissioners recommend advertisers keep abreast of include:

  1. Empirical research about where consumers do and do not look on a screen;
  2. Standard size and color studies regarding readability;
  3. Studies regarding reading habits of users;

Throughout the new online marketing guide, users’ tendency to scan pages instead of reading them is mentioned several times. The point the FTC is making by reiterating our shared tendency to not “read an entire website or online screen” is that advertising disclosures should be so clear that an illiterate individual would be able to tell what it is.

Screen Size & Device Specifications

When word first surfaced that the Federal Trade Commission was considering an update to the Dot Com Disclosures, their focus seemed to be mobile device marketing and social media ads. While the agency did not address all the questions originally asked during the Dot Com Disclosure 2012 workshops, the new version of the guidelines does address issues pertaining to smaller screen sizes and the proliferation of available devices.

General statements regarding screen sizes and device diversification in the 2013 update of the Dot Com Disclosures:

  1. Document states that guidelines are “device neutral” – meaning all the guidelines contained within apply to all electronic communication devices.
  2. “If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.”
  3. Optimizing web pages for mobile devices “is important.”

You’re Responsible for Affiliate Sales People

Not only does the FTC want you to take extra steps to ensure your ads are sized properly for all delivery devices, but they also want you to educate affiliates promoting your product or service. The new Dot Com Disclosures state:

“Advertisers should employ best practices to make it less likely that disclosures will be deleted from space-constrained ads when they are republished by others.”

In other words, monitor everyone hawking your product via electronic means – you could be held responsible for their ineptitude. (Note: This should be taken seriously. After all, these days, the FTC is even going after people’s parents to recover funds.)

What To Do In Cases Where The Disclosure Is Long, But The Screen Size Is Small?

A frequently asked question regarding online advertising disclosures deals with screen size: What do you do if your disclosure is long, but the screen size is small – like on mobile phones?

The new Dot Com Disclosures addresses this question directly – but doesn’t answer it clearly:

 “…if a product’s basic cost…is advertised on one page, but there are significant additional fees the consumer would not expect to incur in order to purchase the product or use it on an ongoing basis, the existence and nature of the those additional fees should be disclosed on the same page and immediately adjacent to the cost claim and with appropriate prominence.

However, if details about the additional fees are too complex to describe adjacent to the price claim, those details may be provided by using a hyperlink.”

In other words, you should make every effort to include limitations and disclosures within the ad itself. If, however, the limitations are too long to fit, you can direct users to a lengthy disclosure page via a hyperlink.

Language & Confirmations

As has been preferred for nearly two decades now, the new Dot Com Disclosures makes a point of praising “plain language.” Gone are the days when a good contract was one freighted with complex Latin phrases and superfluous qualifiers. These days, a contract like that could harm you instead of protecting you.

The new Dot Com Disclosures unambiguously state: “Use plain language and syntax so that consumers understand the disclosures.” The guidelines go on to assert that in order “for disclosures to be effective, consumers must be able to understand them.”

The FTC specifically mentions avoiding the following language pitfalls:

  1. Legalese
  2. Technical jargon
  3. Non-universal and little-known abbreviations (“other abbreviations or icons may or may not be adequate”)
  4. Extraneous language and material, which only serve to make things more confusing

In addition to the above four language points, the 2013 Dot Com Disclosures point blank state that advertisers should require “the consumer to take some affirmative action to proceed past the pop-up or interstitial [page].” It also lays out in black and white that disclosures must come before the “add to shopping cart” stage. More specifically, “disclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation.”

New Social Media Rules

Perhaps the most talked about aspect of the 2013 Dot Com Disclosure updates is the addition of social media-related standards. The most important new social media marketing rule is that the word “Ad:” or “Sponsor:” must be included in a tweet (or other short social media message).

From the Dot Com Disclosures:

“‘Ad:’ at the beginning of a tweet or similar shirt-form messages should inform consumers that the message is an advertisement…”

plus

“the word ‘Sponsored’ likely informs consumers that the message was sponsored by an advertiser.”

and

“It is the advertiser’s responsibility to draw attention to the required disclosures.”

Miscellaneous

A few other notable points included in the newest version of the Dot Com Disclosures:

  1. Negative option trials are mentioned by name – and discouraged.
  2. The guidelines concerning the use of Endorsements and Testimonials in Advertising (“Endorsement Guidelines”) are still in effect.
  3. Disclosures must match the medium of the advertisement. So, if an ad is an online ad, the disclosure must be made online, too; if an ad is a radio ad, the disclosure must be auditory, as well.

If you need to speak with a lawyer who knows and understands the Dot Com Disclosures, get in touch today. Kelly Warner is an Internet law legal practice that has helped swarms of affiliate marketers, online businesses and startups with various FTC and online marketing issues. Hope to hear from you soon.

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