Enforcement efforts by the Federal Trade Commission in the area of false advertising have long emphasized the importance of disclosing material facts relevant to advertising claims to ensure that messages communicated to the public are truthful and non-misleading. In the past few years, the agency has issued disclosure guidelines applicable to promotions in social media, including company postings on Twitter and Facebook and consumer blogs where the authors have received financial or other benefits from the companies whose products are being reviewed. Two recent developments highlight the FTC’s continuing focus on the adequacy of advertising disclosures, not only in social media, but in traditional print and television advertising formats as well.

Disclosure of Material Connections in Social Media Endorsements and the Case of the Over-Enthusiastic Ad Agency

In the past week, the FTC published a proposed consent order against the ad agency Deutsch LA, which had been assisting Sony Computer Entertainment in preparing advertising and promotion for Sony’s new PlayStation Vita game console. About a month before the Sony product was introduced to the market, an assistant account executive at Deutsch sent an email internally to all Deutsch employees, asking them to tweet about the new PlayStation console using the #GAMECHANGER hashtag. Many diligent employees used their personal Twitter accounts to post positive comments about the PlayStation Vita, without disclosing Deutsch’s ad agency work for Sony. The FTC initiated an investigation concerning this conduct (and other misrepresentations the agency believed were being made about performance features of the PlayStation Vita product) on the ground that the employees’ tweets could reasonably be understood as independent comments by ordinary consumers.

The proposed FTC consent order prohibits the future dissemination of advertising or promotional material that fails to disclose the material connection between the ad agency and the advertised product. As the FTC emphasized in its press release accompanying the proposed consent order: “If there is a material connection between an advertiser and a tweeter (or blogger or other endorser), it has to be clearly disclosed.” The FTC clarified that while it is important that an endorsement represent the endorser’s honest opinion, “[g]enuine enthusiasm for a product doesn’t change the obligation to disclose all material connections.” As such, this rule applies even if the endorser truly believes in the truth of the endorsement.

The FTC Still Cares about Proper Disclosures in TV and Print Ads, Despite Its Recent Focus on New Media

In September 2014, the FTC turned its focus back to the adequacy of advertising disclosures in traditional media, building on the guidelines it had issued in 2013 for digital and social media.* The agency publicized that it had sent warning letters to 60 companies (including 20 of the 100 largest advertisers) regarding their failure to make adequate disclosures in TV and print ads. Appropriately named “Operation Full Disclosure,” the FTC’s initiative reported on a number of worrisome trends in TV and print advertisements and provided advertisers with a number of valuable pointers on how to make disclosures in TV and print ads “clear and conspicuous,” as follows:

Worrisome Trends:

      • Relying on a disclaimer in an attempt to remedy a misleading advertising claim
      • Quoting a price, but not adequately disclosing the conditions for obtaining that price
      • Highlighting best-case scenarios without disclosing average results
      • Advertising products as unique or superior without disclosing how the advertiser defines the product category being compared

Valuable Pointers:

      • Make key qualifications part of the main advertising claim. While disclaimers can be useful in providing more complete information or terms and conditions relevant to an ad claim, disclaimers that undermine, or are inconsistent with, the main take-away message will not be sufficient to cure the misleading nature of the ad claim.
      • Fine print must not be “too fine” – it should be easily seen, read and understood. Attend to font size, color of the text, the complexity of the language used, the location of the disclaimer and, for TV ads, how long the notice appears on-screen. Consumers should not be expected to speed-read through miniature-sized technical language appearing in a light color or search for the relevant disclosure within a large body of text.
      • When comparing your product to a competitor’s product, consider if you have adequately and specifically disclosed the basis for the comparison.

*In March of 2013, the FTC released .com Disclosures: How to Make Effective Disclosures in Digital Advertising to help advertisers better understand how consumer protection laws apply online. A copy of the .com Disclosures can be found here and our article about those guides, Think Big in a Small World: FTC Guidelines for Effective Disclosures in Digital Advertising, can be found here.