FTC Takes a Closer Look at Online Ads

SAN FRANCISCO (05/05/2000) - The Federal Trade Commission has gone on the offensive against e-commerce advertising, taking steps to ensure that new-media ads are treated no differently than old-media ads.

The FTC issued a working paper Wednesday that examines the agency's consumer protection guidelines, applies them to Internet ads and emphasizes the importance of clear and conspicuous disclosures. "Dot-commerce is the new Main Street," FTC Director of Consumer Protection Jodie Bernstein said in a statement. "This guidance represents the cooperative efforts of government, communications experts in industry, and consumer groups to achieve fair, informative online advertising."

The guidelines in the working paper, titled "Dot Com Disclosures: Information about Online Advertising," were approved by a commission vote of 5-0. The action was prompted by the breakneck growth of e-commerce business and by heightened concerns about consumer protection in the online age. The FTC says its prohibition of "unfair or deceptive acts or practices" broadly covers advertising claims, marketing and promotional activities and sales practices, regardless of their medium.

The FTC also examined issues such as whether ads are likely to be considered conspicuous. The agency said that to determine whether an ad has the potential to mislead, it would take into account the following factors: * Relative placement of disclosures within an ad. * The disclosure's proximity to the relevant claim. * Prominence of the disclosure. * Whether other items in the ad distract attention from the disclosure. * Whether the ad is so lengthy that the disclosure needs to be repeated. * Whether audio disclosures are presented at an adequate volume. * Whether visual disclosures appear for a sufficient duration. * Whether the language of the disclosure is understandable. The working paper contains mock advertisements that illustrate these factors.

One of the mock ads demonstrates that a highlighted word linking to a clarification about the size of a product might not be sufficient notice.

Another shows how disclosure information is visible when viewed with one browser but not with another. To date, Net advertising has gone largely unregulated. But now that the FTC is taking a closer look at Web ads, e-commerce vendors will need to tread carefully to avoid misleading claims in their online banners and offers.

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