The Federal Trade Commission (“FTC”) and state attorneys general across the country have made it clear that businesses that use advertisements considered to be “misleading” or “deceptive” will be subject to stiff penalties, including fines. If you use the Internet to advertise, you need to be aware of the laws governing deceptive advertising.
First and foremost, you must be certain that all claims that you make in your advertising materials are truthful and substantiated (for example, clinical studies that support health and beauty product claims are necessary). This will often require that you include certain disclosures in your advertising. All disclosures that are necessary to prevent an advertisement from being considered deceptive or misleading must be presented both clearly and conspicuously. When evaluating whether or not a disclosure is clear and conspicuous, the FTC advises advertisers to consider the following three factors:
- placement of the disclosure in the advertisement;
- proximity of the disclosure to the applicable claim; and
- prominence of the disclosure
In connection with these factors (it may be helpful to remember them as the “3 Ps”), you should consider: (1) whether the design of the advertisement draws attention away from the disclosure; (2) whether the advertisement is so long that it requires repetition of the disclosure; and (3) whether the disclosure is easily understandable.
As far as the first two “Ps,” “placement” and “proximity,” are concerned, you should ensure that the disclosure appears directly adjacent to, or very close to, the relevant claim. However, there may be instances, such as when a lengthy disclosure is required, where consumers may need to scroll down to view the entire disclosure. In such cases, you should use explicit instructions regarding the need to scroll down, as opposed to a general statement, such as “see below for details.”
Hyperlinks may be used to communicate some disclosure information. However, any disclosures that are an “integral part of a claim” or “inseparable from it,” such as additional costs that apply to a transaction, should be placed directly next to the applicable claim.
Where consumers are able to purchase goods or services via the website on which you are advertising, you should never rely solely on a hyperlink to communicate pricing information. All pricing information, including any additional costs that may apply, should appear directly above the “submit” button. In addition, you should provide information, or access to information, above the “submit” button regarding how the consumer’s data may be used by you and your business partners. To this end, it is important that you communicate to consumers that by clicking the “submit” button, consumers are providing their express, informed consent to your disclosed billing and privacy practices.
Further, you must be careful when using the word “free” in connection with the product or service being advertised. Be sure that all terms, conditions and obligations upon which the “free” offer may be contingent appear in close proximity to the applicable offer presented in the advertisement.
Regarding the third “P,” “prominence,” the onus is on the advertiser to draw the consumer’s attention to the disclosures. Be sure that the disclosure does not get lost within the rest of the advertisement. The important thing to remember is that consumers should not have to go out of their way to hunt down the disclosure. To avoid this, you may need to repeat the disclosure.
Be aware that simply providing a disclosure may not be enough. The average consumer must be able to fully understand the terms of the disclosure. To accomplish this, you should use simple and easy-to-understand words and sentences. If consumers are unable to understand what is being disclosed to them, the entire advertisement may be considered deceptive.
In addition to the above, please note that advertisers that utilize e-mail marketing are subject to additional deceptive advertising laws. The federal CAN-SPAM Act of 2003, as amended (“CAN-SPAM”), sets forth specific requirements that must be followed when advertising via e-mail, as well as penalties for those that violate the statute. Under CAN-SPAM, the use of false or misleading header information is prohibited. In other words, you must indicate the identity of the sender in all e-mail marketing messages. Additionally, your subject line should accurately reflect the products or services advertised in the applicable e-mail. Finally, you must clearly and conspicuously identify the e-mail as an advertisement, provide a valid physical postal address for the sender and provide consumers with a mechanism for opting out from the receipt of future commercial e-mail.
Please note that this is only a brief overview of some of the legal issues surrounding deceptive advertising on the Internet. Remember to obtain guidance from a licensed legal professional prior to developing and publishing online advertising.