Internet Advertising FTC 101

What is the FTC? Federal Trade Commission (FTC) created in 1914 Aims to prevent unfair methods of competition in commerce, unfair or deceptive acts or practices Enacts industry-wide trade regulation rules

Division of Advertising Practices Enforces Federal truth-in-advertising laws and focuses on: Claims for foods, drugs, dietary supplements Weight-loss advertising Advertising and Marketing directed to children Tobacco and alcohol advertising Protecting children’s privacy online Claims about product performance made on the Internet

Division of Enforcement Investigations of violations of consumer protection laws relating to e- commerce and the Internet

How the FTC Brings an Action Consent Order with the company Administrative Complaint or seeks injunctive relief in the federal courts.

Who can End up on the Hook? Potentially, EVERYONE! The FTC considers everyone in the chain of advertising liable Advertisers Affiliate Networks Affiliates Liability ?

Recent Enforcement Actions ValueClick (2/08) $2.9 million penalty Adteractive (11/07) $650,000 penalty

Advertisement Content Ads must be truthful and non-deceptive Evidence to back-up ad claims; and Ads cannot be unfair Source: FTC Frequently Asked Advertising Questions: A Guide for Small Business

Rule of Thumb Would your grandmother be misled by the ad?

Recent Examples of Deception Hoodia: Sili Neutraceuticals (2/08) $5.9 million dollar fine for falsely advertising weight loss products Claims of 40 lbs. lost in a month Reverses aging process “Scientific Evidence” for weight loss eDebitPay (1/08) Prepay debit card advertiser engaged in deceptive marketing by failing to disclose terms and fees – hidden costs Over $2.2 Million in penalties

Focus: Use of the word Ohio Plaintiff’s interpretation: Font Size – Terms and Conditions must be at least half as large as the word “free” Proximity – Terms should appear in close proximity to the word “free” No Asterisk – Footnote with use of an asterisk or other symbol is not adequate disclosure NOTE: OHIO GIVES GREAT WEIGHT TO FTC RULINGS

Disclaimers Disclaimers must be CLEAR and CONSPICUOUS

FTC’s 4 s for Disclaimers rominence……big enough? resentation……easy to understand? lacement……visual connection? roximity……close to claim? Lesley Fair: Bureau of Consumer Protection, FTC

FTC’s 4 s for Disclaimers rominence Is the dislaimer noticeable enough to read? Font Size – Size does matter! Color and Contrast – Fade away Font Use hyperlink styles consistently within an ad (Don’t hide the link)

FTC’s 4 s for Disclaimers resentation Is the wording and format easy to understand? “Click Here for terms” “See below for important information on diamond weights” “See below for details”

FTC’s 4 s for Disclaimers lacement Is it where consumers will look? roximity Is it close to the claim qualified? Place the disclaimer or hyperlink near relevant information and make it noticeable

Use of Symbols Don’t be subtle. Asterisks or other symbols by themselves are discouraged and may not be effective. Typically, they provide no clues about why the claim is qualified or the nature of the disclosure.

Other Concerns Website must have clickable link to a Privacy Policy Strict compliance with the Privacy Policy The fact that “the competition is doing it” does not make it right Awareness of current Federal and State laws and regulations

Questions?