Disclosures: 10 Things All Marketers Must Know

This IS PART ONE in a five part series focusing on Internet marketing and online lead generation compliance. 

From weight loss and muscle building products, to skin creams and anti-aging products, the FTC Act’s prohibition on “unfair or deceptive acts or practices” encompasses online advertising, marketing and sales. Commission rules and guides are not limited to any particular medium used to disseminate claims or advertising, and therefore, apply to the wide spectrum of online activities.

The FTC has also made it abundantly clear that no industry is safe from an investigation or enforcement action.

REQUIRED DISCLOSURES MUST BE CLEAR AND CONSPICUOUS.

In evaluating whether a disclosure is likely to be clear and conspicuous, the key is the overall net impression of the ad. If a disclosure is not seen or comprehended, it will not change the net impression consumers take from the ad and therefore cannot qualify the claim to avoid a misleading impression. In reviewing their ads, advertisers should adopt the perspective of an ordinary, reasonable consumer. Assume that consumers do not read an entire website or online screen, just as they do not read every word on a printed page.

PROXIMITY AND PLACEMENT.

A disclosure is more effective if it is placed near the claim it qualifies or other relevant information. Proximity increases the likelihood that consumers will see the disclosure and relate it to the relevant claim or product. An advertiser might measure proximity in terms of whether the disclosure is placed adjacent to the claim, or whether it is separated from the claim by text or graphics. Websites and mobile applications, however, are interactive and have a certain depth — with multiple pages or screens linked together and pop-up screens, for example — that may affect how proximity is evaluated. Mobile devices also present additional issues because a disclosure that would appear on the same screen of a standard desktop computer might, instead, require significant vertical and horizontal scrolling on a mobile screen.

A disclosure is more likely to be effective if consumers view the disclosure and the claim that raises the need for disclosure (often referred to as a “triggering claim”) together on the same screen. Often, disclosures consist of a word or phrase that may be easily incorporated into the text, along with the claim. Doing so increases the likelihood that consumers will see the disclosure and relate it to the relevant claim.

In some circumstances, it may be difficult to ensure that a disclosure appears on the “same screen” as a claim or product information. Some disclosures are long and thus difficult to place next to the claims they qualify. In addition, computers, tablets, smartphones, and other connected devices have varying screen sizes that display ads and websites differently. In these situations, an advertiser might place a disclosure where consumers might have to scroll to reach it. Requiring consumers to scroll in order to view a disclosure may be problematic, however, because consumers who do not scroll enough (and in the right direction) may miss important qualifying information and be misled.

When advertisers are putting disclosures in a place where consumers might have to scroll in order to view them, they should use text or visual cues to encourage consumers to scroll and avoid formats that discourage scrolling. Text prompts can indicate that more information is available. An explicit instruction like “see below for important information on restocking fees” will alert consumers to scroll and look for the information. The text prompt should be tied to the disclosure to which it refers. General or vague statements, such as “details below,” provide no indication about the subject matter or importance of the information that consumers will find and are not adequate cues.

Also, the design of some pages might indicate that there is no more information following and, therefore, no need to continue scrolling. If the text ends before the bottom of the screen or readers see an expanse of blank space, they may stop scrolling and miss the disclosure, as well as the links that normally signify the bottom of a webpage, e.g., “contact us,” “terms and conditions,” “privacy policy,” and “copyright.” If scrolling is necessary to view a disclosure, then, ideally, the disclosure should be unavoidable — consumers should not be able to proceed further with a transaction, e.g., click forward, without scrolling through the disclosure.

HYPERLINKING TO A DISCLOSURE.

Hyperlinks allow additional information to be placed on a webpage entirely separate from the relevant claim. They can provide a useful means to access disclosures that are not integral to the triggering claim, provided certain conditions are met.

Hyperlinked disclosures may be particularly useful if the disclosure is lengthy or if it needs to be repeated (because of multiple triggering claims, for example). However, in many situations, hyperlinks are not necessary to convey disclosures. If a disclosure consists of a word or phrase that may be easily incorporated into the text, along with the claim, this placement increases the likelihood that consumers will see the disclosure and relate it to the relevant claim.

Disclosures that are an integral part of a claim or inseparable from it should not be communicated through a hyperlink. Instead, they should be placed on the same page and immediately next to the claim, and be sufficiently prominent so that the claim and the disclosure are read at the same time, without referring the consumer somewhere else to obtain this important information. This is particularly true for cost information or certain health and safety disclosures.

Similarly, if a product’s basic cost (e.g., the cost of the item before taxes, shipping and handling, and any other fees are added on) 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 those additional fees should be disclosed on the same page and immediately adjacent to the cost claim, and with appropriate prominence.

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

The key considerations for evaluating the effectiveness of all hyperlinks are: (i) the labeling or description of the hyperlink; (ii) consistency in the use of hyperlink styles; (iii) the placement and prominence of the hyperlink on the webpage or screen; and (iv) the handling of the disclosure on the click-through page or screen.

Do not ignore technological limitations. Do not use blockable pop-up disclosures.

CHOOSE THE RIGHT LABEL FOR THE HYPERLINK.

A hyperlink that leads to a disclosure should be labeled clearly and conspicuously. The hyperlink’s label — the text or graphic assigned to it — affects whether consumers actually click on it and see and read the disclosure.

Make it obvious. Consumers should be able to tell that they can click on a hyperlink to get more information. Simply underlining text may be insufficient to inform consumers that the text is a hyperlink. Using multiple methods of identifying hyperlinks, such as both a different color from other text and underscoring, makes it more likely that hyperlinks will be recognized.

Label the link to convey the importance, nature, and relevance of the information to which it leads.  The hyperlink should give consumers a reason to click on it. That is, the label should make clear that the link is related to a particular advertising claim or product and indicate the nature of the information to be found by clicking on it.

The hyperlink label should use clear, understandable text. Although the label itself does not need to contain the complete disclosure, it may be necessary to incorporate part of the disclosure to indicate the type and importance of the information to which the link leads. On the other hand, in those cases where seeing a hyperlinked disclosure is unavoidable if a consumer is going to take any action with respect to a product or service — e.g., the product or service can only be purchased online and the consumer must click on that link to proceed to a transaction — the label of the hyperlink may be less important.

Do not hide the ball. Some text links provide no indication about why a claim is qualified or the nature of the disclosure. In many cases, simply hyperlinking a single word or phrase in the text of an ad is not likely to be effective. Although some consumers may understand that additional information is available, they may have different ideas about the nature of the information and its significance.

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 to which they lead and are likely to be inadequate. Even labels such as “important information” or “important limitations” may be inadequate.

Unfortunately, there is no one-size-fits-all word or phrase that can be used as a hyperlink label, but more specificity will generally be better.

Do not be subtle.  Symbols or icons by themselves are not likely to be effective as hyperlink labels leading to disclosures that are necessary to prevent deception. A symbol or icon might not provide sufficient clues about why a claim is qualified or the nature of the disclosure. It is possible that consumers may view a symbol as just another graphic on the page. Even if a website explains that a particular symbol or icon is a hyperlink to important information, consumers might miss the explanation, depending on where they enter the site and how they navigate through it.

Account for technological differences and limitations. Consider whether and how your linking technique will work on the various programs and devices that could be used to view your advertisement. Using hyperlink styles consistently increases the likelihood that consumers will know when a link is available. Although the text or graphics used to signal a hyperlink may differ across websites and applications, treating hyperlinks inconsistently within a single site or application can increase the chances that consumers will miss — or not click on — a disclosure hyperlink.

The hyperlink should be proximate to the claim that triggers the disclosure so consumers can notice it easily and relate it to the claim. Typically, this means that the hyperlink is adjacent to the triggering term or other relevant information.

Consumers may miss disclosure hyperlinks that are separated from the relevant claim by text, graphics, blank space, or intervening hyperlinks, especially on devices with small screens. Format, color, or other graphics treatment also can help to ensure that consumers notice the link.

Getting to the disclosure on the click-through should be easy. The click-through page or screen — that is, the page or screen the hyperlink leads to — must contain the complete disclosure and that disclosure must be displayed prominently. Distracting visual factors, extraneous information, and opportunities to “click” elsewhere before viewing the disclosure can obscure an otherwise adequate disclaimer.

Get consumers to the message quickly. The hyperlink should take consumers directly to the disclosure. They should not have to search a click-through page or go to other places for the information. In addition, the disclosure should be easy to understand.

DISPLAY DISCLOSURES PRIOR TO PURCHASE.

Disclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation. In general, disclosures are more likely to be effective if they are provided in the context of the ad, when the consumer is considering the purchase.

Different considerations apply, however, in different situations. Where advertising and selling are combined on a website or mobile application — that is, the consumer will be completing the transaction online — disclosures should be provided before the consumer makes the decision to buy, e.g., before clicking on an “order now” button.

Some disclosures must be made in conjunction with the relevant claim or product. Consumers may not relate a disclosure on the order screen to information they viewed much earlier. It also is possible that after surfing a company’s website, some consumers may decide to purchase the product from the company’s brick and mortar store. Those consumers would miss any disclosures placed only on the ordering screen. So that these consumers do not miss a necessary disclosure, it may have to be on the same page as the claim it qualifies.

EVALUATE PROXIMITY IN SPACE-CONSTRAINED ADS.

Many space-constrained ads displayed today are teasers. Because of their small size and/or short length, space-constrained ads, such as banner ads and tweets, generally do not provide very much information about a product or service. Often, consumers must click through to the website to get more information and learn the terms of an offer.

If a space-constrained ad contains a claim that requires qualification, the advertiser disseminating it is not exempt from disclosure requirements. Disclose required information in the space-constrained ad itself or clearly and conspicuously on the website to which it links. In some cases, a required disclosure can easily be incorporated into a space-constrained ad.

In other instances, the disclosures may be too detailed to be disclosed effectively in the ad itself. These disclosures may sometimes be communicated effectively to consumers if they are made clearly and conspicuously on the website to which the ad links.

If a disclosure is required in a space-constrained ad, such as a tweet, the disclosure should be in each and every ad that would require a disclosure if that ad were viewed in isolation. Do not assume that consumers will see and associate multiple space-constrained advertisements.

Short-form disclosures might or might not adequately inform consumers of the essence of a required disclosure. For example, “Ad:” at the beginning of a tweet or similar short-form message should inform consumers that the message is an advertisement, and the word “Sponsored” likely informs consumers that the message was sponsored by an advertiser. Other abbreviations or icons may or may not be adequate, depending on whether they are presented clearly and conspicuously, and whether consumers understand their meaning so they are not misled. Maintain disclosures with republication.

Consult with an FTC compliance and advertising clearance attorney with hands-on experience weighing the relevant factors.

PROMINENCE.

It is the advertiser’s responsibility to draw attention to the required disclosures. Display disclosures prominently so they are noticeable to consumers. The size, color, and graphics of the disclosure affect its prominence.

Disclosures that are at least as large as the claim to which they relate are more likely to be effective. A disclosure in a color that contrasts with the background emphasizes the text of the disclosure and makes it more noticeable. Information in a color that blends in with the background of the ad is likely to be missed. Graphics help and can make disclosures more prominent.

Evaluate the size, color, and graphics of the disclosure in relation to other parts of the website, email or text message, or application. The size of a disclosure should be compared to the type size of the claim and other text on the screen. If a claim uses a particular color or graphic treatment, the disclosure can be formatted the same way to help ensure that consumers who see the claim are also able to see the disclosure and relate it back to the claim.

Websites may display differently, depending on the program and device used. Advertisers should consider different display options to ensure that qualifying information is displayed clearly and conspicuously. Account for viewing on different devices. If a disclosure is too small to read on a mobile device and the text of the disclosure cannot be enlarged, it is not a clear and conspicuous disclosure.

Do not bury disclosures in a long paragraph of unrelated text or relegate them to website agreements. Simply because a consumer indicates that they “agree” to a term or condition, does not make the disclosure clear and conspicuous.

REPITITION IS SOMETIMES NECESSARY.

It may be necessary to disclose information more than once to convey a non-deceptive message. Repeating a disclosure makes it more likely that a consumer will notice and understand it, and will also increase the likelihood that it will be seen by consumers who may be entering the website at different points. Still, the disclosure need not be repeated so often that consumers would ignore it or it would clutter the ad.

Always consider whether consumers who see only a portion of their ad are likely to be misled because they will either miss a necessary disclosure or not understand its relationship to the claim it modifies. Also consider whether a clearly-labeled hyperlink could be repeated on each page where the claim appears, so that the full disclosure would be placed on only one page of the site.

WHEN PRACTICAL, INCORPORATE RELEVANT LIMITATIONS AND QUALIFYING INFORMATION INTO THE UNDERLYING CLAIM, RATHER THAN HAVING A SEPARATE DISCLOSURE QUALIFYING THE CLAIM.

For example: “Helps reduce the visibility of wrinkles around eyes in women over 60.”

A DISCLOSURE CANNOT CURE A FALSE CLAIM.

A disclosure can only qualify or limit a claim to avoid a misleading impression. If a disclosure provides information that contradicts a material claim, the disclosure will not be sufficient to prevent the ad from being deceptive. In that situation, the claim itself must be modified.

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The first half of 2015 has brought an increasingly aggressive regulatory environment. It has also illustrated a symbiotic relationship between state and federal regulatory authorities. This compliance series should be of interest to any company or individual engaging in Internet marketing or online lead generation, including corporate counsel.

Please contact the author if you are interested in discussing the design and implementation of preventative compliance controls that effectively walk the line between commerce and compliance, or if you are the subject of an advertising related investigation or enforcement action.

Information conveyed in this article does not purport to cover every issue associated with online advertising disclosures. Rather, it is intended to provide guidance concerning practices that may increase the likelihood that disclosures comply with applicable laws, rules, regulations and guidelines. This article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information in this article without seeking the advice of an attorney.