Federal_Trade_CommissionAs discussed in my last post, you may have to qualify some claim you make with a disclosure in order for it not to be a misleading claim. How to use disclosures to qualify information and avoid misleading your consumers is just as important as any other aspect of FTC law. In fact, this is probably the biggest area of legal concern for most Internet businesses, affiliates, marketers, etc.

If you don’t use disclosures properly, they will be ineffective. The FTC has stated on many occasions that its single purpose in enforcing its deceptive advertising laws is to arm the consumer with the tools to make an informed decision. If your consumers will be able to make an informed choice based upon the existence, placement and language of any necessary disclosure, you will satisfy the FTC.

 

The Concept of Clear and Conspicuous!

If information is necessary to qualify or prevent an ad from being a misleading claim, it must be presented clearly and conspicuously. Whether a disclosure meets this basic standard determines if the disclosure is effective and allows the consumer to make an informed decision. The overall net impression of the ad must make any claims truthful and substantiated. This means that a claim will still be deceptive if the disclaimer is not clear or located in some remote spot where it is not read in conjunction with the underlying claim.

Unfortunately, there is no uniform standard or universal rule of law specifying what font to use, a minimum type size, or exactly where to place your website disclosures. According to the FTC, “advertisers have the flexibility to be creative in designing their ads, so long as necessary disclosures are communicated effectively and the overall message conveyed to consumers is not misleading.” The best way to disclose information depends on what information must be provided and the nature of the advertisement.

The good news is that the FTC has issued guidance on the matter in the form of published guidelines. (FTC “Dot Com Disclosures, Information about Online Advertising,” May, 2000). Basically, you should consider these guidelines as the law. In order for a disclosure to be considered clear and conspicuous and qualify an otherwise misleading claim, the Four P’s must be followed. “Prominence, Presentation, Placement and Proximity” are the four critical factors that the FTC believes determine if a disclosure is clear and conspicuous.

 

-PROMINENCE: Is the disclosure big enough for consumers to notice and read?”

-PRESENTATION: Is the wording and format easy for consumers to understand?”

-PLACEMENT: Is it in a place where consumers are going to look?”

-PROXIMITY: Is it close to the claim it qualifies?”

 

As the FTC points out, most consumers are not expecting to find disclosures on your website and won’t read the entire website. So, disclosures must be placed so that consumers are likely to notice and understand them. Drawing attention to the disclosure is critical and the disclosure must be close enough to the claim it qualifies to resonate in the mind of the customer. In other words, it cannot be so far removed from the original claim that the disclosure is not seen as being read in conjunction with the claim.

 

The next post will dissect the details of using website disclosures in the context of the four P’s, according to the FTC’s Dot Com Disclosures Guidelines.