Arent Fox Alert: FTC Holds Public Workshop Conference To Discuss Internet Advertising Disclosures

On May 14, 1999 the Federal Trade Commission (FTC) held a public workshop conference to discuss the applicability of its rules and guides to the Internet. In particular, the conference focused on how the Commission's "clear and conspicuous" requirement for certain advertising disclosures should be applied in the Internet context.

The "Clear and Conspicuous" Standard in Traditional Media

Many of the FTC's rules and guides require that material information be disclosed "clearly and conspicuously." That standard requires disclosures to be readable and understandable to the average viewer.

As the "clear and conspicuous" standard has been applied to traditional media, such as print or television, the FTC had not required that disclosures be in a certain type size, or particular placement in a print ad, or on the television screen for a particular duration. Those in attendance at the meeting were particularly interested in whether the FTC would announce a departure from this approach for the Internet context. Previously, industry groups, in particular, were concerned that the FTC would prohibit certain techniques used on the Internet, such as linking or scrolling, to make required disclosures.

The "Clear and Conspicuous" Standard as Applied to the Internet

Importantly, the FTC staff announced that it would not be modifying its approach to the "clear and conspicuous" standard for the Internet context. Rather, during the workshop, the FTC staff wanted to examine mock advertising examples with various disclosures and obtain input from industry, government, and consumer groups regarding the sufficiency of such disclosures. This information would help educate the FTC staff when analyzing Internet advertising in the future.

Prior to engaging in that discussion, Consumer Protection Bureau Director Jodie Bernstein opened the conference by announcing the formation of an Internet Advertising Group within the Bureau of Consumer Protection's Division of Advertising Practices. Director Bernstein announced that this one year project would be staffed by experienced FTC attorneys and computer specialists who are helping the FTC build a state-of-the-art Internet lab to assist the staff attorneys identify areas for investigation and action. In particular, the Internet Lab will provide hardware and software for the FTC staff to enhance its ability to monitor web advertising and marketing practices in a more systematic way.

Director Bernstein then turned the meeting over to Elaine Kolish, Associate Director for Enforcement, Bureau of Consumer Protection, to moderate the discussion. Importantly, Ms. Kolish underscored Director Bernstein's remarks that the Commission was not interested in modifying the current "clear and conspicuous standard." Participants at the workshop conference discussed whether, in general, and in the context of specific mock advertisements, specifically, linking, scrolling, and other techniques unique to Internet advertising, were appropriate to make "clear and conspicuous" disclosures.

Two Important Messages

From the discussion, which was lively at times, two important messages could be gleaned:

  • The FTC staff is open to learning about the Internet and, in particular, how consumers use the Internet to view ads and make purchases. Thus, if your company's Internet advertising is a target of an FTC inquiry, it may be useful (if the information is available) to educate the FTC staff about how visitors to your company's Web site use the site and view your ads.
  • In a related point, Associate Director Kolish noted that the FTC always seeks "click through" rates when making an inquiry about advertising disclosures made through links. Those rates represent the percentage of visitors who click on a link to obtain the full text of an advertising disclosure.

Workshop Participants

Present at the meeting were members from industry, government, and consumer advocacy groups, including representatives from AARP, America Online, Inc., American Advertising Federation, American Association of Advertising Agencies, Association of National Advertisers, Inc., Bell Atlantic, Business Technology Association, Center for Media Education, CommerceNet, Consumer Federation of America, Computer Corp., Direct Marketing Association, Direct Selling Association, DoubleClick, Inc., Electronic Retailing Association, Federated Department Stores, Inc., Ford Motor Company, Grocery Manufacturers of America, Information Technology Association of America, Internet Alliance, National Consumers League, National Retail Federation, Promotion Marketing Association, QVC, Inc., and a coalition of State Attorneys General.