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Selling on the Internet? Watch What You Disclose

Laptop with sales notice on the screenMaking the LinkThe FTC allows linking to disclosure material, if you:• Make the link obvious.• Place the link close to the claim.• Use consistent hyperlink styles so consumers know when a link is available.• Describe the importance, nature and relevance of the disclosure.• Make sure the link leads directly to the disclosure.• Monitor click-through rates to ensure consumers are getting the disclosure.Online advertising is expected to grow even more this year. And although Internet advertising is still relatively new, the Federal Trade Commission is watching and going after companies with ads that it doesn't consider truthful and substantiated.
By its nature, the Internet combines aspects of print, television and radio, giving consumers a multimedia, interactive environment. This raises advertising issues that are unique even though the same FTC standards apply to online ads as they do to more traditional media. The guiding principle is truth and substantiation of claims.
Sounds easy enough. But when it comes down to the legal requirement of "clear and conspicuous" disclosure, the waters start to muddy.
Some online ads use only text while others are a combination of text, graphics, video and audio. To the FTC, the key is the overall impression the ad makes. The commission urges advertisers to adopt the stance of a reasonable consumer and remember that people don't generally read an entire website any more than they read every word on printed pages.
Typically, print ads disclose key material in small print at the bottom. This information is at the end of television or radio commercials. Online, you can choose between:
  • Placing the disclosure on the same page as the ad.
  • Linking to the disclosure information.
Even the colors and contrasts are important when designing an Internet ad. To help clear up some of the confusion, the FTC has issued guidelines explaining what it looks for when determining if an online ad's disclosure is clear and conspicuous.
Here's a summary of the major points to help you comply with the regulations:
Proximity: Place disclosures as close to the ad as possible -- on the same screen if space allows. Provide visual cues to get the consumer to scroll down if the material is at the end of a multi-screen page.
Prominence: Being subtle doesn't work -- the disclosure must be obvious. Take a look at the size, color and graphic treatment of the disclosure in relation to the rest of the screen. Make them large enough and accessible from every appropriate page on the site.
Distractions: Watch the text, graphics, links and sound so they don't distract the consumer's attention from the disclosure.
Audio/ Video: Use audio disclosure for audio ads and video disclosure for video ads, similar to traditional commercials. The volume and cadence must allow consumers to understand. Not all computer users have speakers or video capacity, so don't put disclosures only in these clips.
Language: Make it clear. Remember, a reasonable consumer -- not a specialist -- has to understand the ad.
Scrolling: Use text or visual cues to encourage scrolling to find disclosures and be specific. For example, "See below for important details about our product." Regulators don't like anything that discourages scrolling, such as leaving blank space at the bottom of one page, with the disclosures on the following page.
Hyperlinks: Take consumers to a disclosure through a link (see right-hand box) but the FTC warns that key data about health, safety and cost should be on the same page as the claim.
Banner ads: Banners don't always have to contain disclosure. It may be enough to put the information on the page the ad links to. The FTC considers the effectiveness of the linked page and how hard it would be to fit the disclosure into the banner.
Carefully follow the FTC guidelines when designing Internet sales efforts. If you're unsure about meeting the regulations, get legal advice or an opinion letter from the FTC.
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