1. Internet Advertising
FTC 101

2. 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

3. 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

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

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

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

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

8. 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

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

10. 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

11. 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

12. Disclaimers
Disclaimers must be CLEAR and CONSPICUOUS

13. 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

14. 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)

15. 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”

16. 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

17. 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.

18. 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

19. Questions?