As part of its “Operation Full Disclosure,” the Federal Trade Commission (“FTC”) recently issued over sixty “warning” letters to companies involved in national television and print advertising, including twenty of the 100 largest advertisers in the country, for allegedly failing to make adequate disclosures in their ads.
Operation Full Disclosure
The FTC scrutinized a number of national TV and print advertisements that contained fine print or were otherwise difficult to read to determine whether such ads were not “clear and conspicuous” and, therefore, deceptive to consumers.
The FTC looked at ads for a variety of products and services, including Spanish language ads, and indicated that the ones that contained inadequate disclosures fell into numerous “categories,” including those that: (1) quoted the price of a product or service, but did not adequately disclose the conditions for obtaining that price; (2) failed to adequately disclose an automatic billing feature; (3) promoted a “risk-free” or “worry free” trial period, but failed to adequately disclose that consumers had to pay for shipping; and (4) failed to adequately disclose issues related to the safety or legality of a product or service.
While the FTC has not disclosed the recipients of its warning letters, it cautions the industry that “advertisers who did not receive a letter should not assume that their advertisements are fine.”
How to Avoid Allegations of Deceptive Marketing
The FTC uses a mnemonic to assist advertisers in making their marketing materials more consumer friendly and more “clear and conspicuous.” It calls it the 4Ps:
- Prominence: Whether the disclosure is capable of being read easily (e.g., size, contrast, etc.);
- Presentation: Whether the disclosure is capable of being understood easily (i.e., not written in legalese);
- Placement: Whether the disclosure is located where consumers are likely to look (i.e., not buried in a disclaimer or footer); and
- Proximity: Whether the disclosure is close to the claim it modifies (e.g., a bold headline should not say “free” with an asterisk that leads to a disclaimer with conditions).
As we have cautioned in the past, the FTC has obtained large judgments against advertisers under the FTC Act for claims involving false advertising and deceptive sales practices. Numerous advertisers also have entered into significant settlements with the FTC over such claims. It is important to review your ads – regardless of whether they appear online, in print or in other forums – to ensure compliance with the FTC Act and other applicable state and federal laws.
If you are interested in learning more about this topic or are facing private or regulatory action relating to your marketing practices, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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