US regulator vows to take enforcement action over deceptive social media ads

The Federal Trade Commission (FTC) has updated guidance it previously published in 2000 on the topic of disclosures in online advertising. (53-page / 2.33MB PDF) In it the regulator said that firms that advertise through online mediums where physical space is limited, such as is inherently the case when posting on Twitter, are still required to detail qualifications to the claims they make in the form of disclosures.

The FTC said that its guidance could be used to help businesses comply with consumer protection laws in the US, which fundamentally prohibit unfair or deceptive acts or practices. The regulator warned that businesses found to have deceived consumers in online advertising, regardless of any space constraints they were under, could be subject to enforcement action.

"Although online commerce (including mobile and social media marketing) is booming, deception can dampen consumer confidence in the online marketplace," the FTC said in its guidance. "To ensure that products and services are described truthfully online and that consumers get what they pay for, the FTC will continue to enforce its consumer protection laws."

"Most of the general principles of advertising law apply to online ads, but new issues arise almost as fast as technology develops. The FTC will continue to evaluate online advertising, using traditional criteria, while recognizing the challenges that may be presented by future innovation. Businesses, as well, should consider these criteria when developing online ads and ensuring they comply with the law," the regulator said.

"If a space-constrained ad contains a claim that requires qualification, the advertiser disseminating it is not exempt from disclosure requirements," it added.

In a blog posted to accompany the guidance, the FTC said that advertisers should not run promotions if they cannot display disclosures clearly and prominently.

"Advertisers should make sure their disclosures are clear and conspicuous on all devices and platforms that consumers may use to view their ads," Lesley Fair, senior attorney with the FTC's Bureau of Consumer Protection, said in the blog. "That means that if an ad would be deceptive or unfair (or would otherwise violate an FTC rule) without a disclosure — but the disclosure can’t be made clearly and conspicuously on a particular device or platform — then that ad shouldn’t run on that device or platform."

In its guidance the FTC warned that some icons or abbreviations companies use in space-constrained ads may not constitute suitable disclosure of qualifications to claims. It said that businesses that mislead a "significant minority of reasonable consumers" would be breaking US consumer protection laws.

Advertisers cannot also automatically assume they have made suitable disclosures by including those disclosures on web pages they provide a hyperlink to, the FTC said. The regulator said links would be an inappropriate way to communicate disclosures that are "an integral part of a claim or inseparable from it". Disclosures made through links must also be sufficiently descriptive, it said.

"Some text links provide no indication about why a claim is qualified or the nature of the disclosure," the FTC further said in its updated guidance. "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," it added.

The FTC said companies should avoid using 'pop-up' disclosures that can be blocked by pop-up blocking software, and also warned those that make disclosures by displaying text that appears when users hover their mouse over links that such techniques may not work when ads are displayed on mobile devices.