Forecasting the Digital Future: Avoiding a “Friend Request” from the FTC

The regulatory burden upon corporate social media strategy was further increased when the Federal Trade Commission (FTC) issued its revised .com Disclosures guidelines on March 12, 2013 (http://ftc.gov/os/2013/03/130312dotcomdisclosures.pdf). The original guidelines had been published in 2000, long before “dot com,” “smartphone,” and “social media” became household terms. This highly anticipated revision of the original document had been underway since May 2011, and appears to have been closely timed with the recent FFIEC social media rulemaking.

Guidelines are often drawn from successful FTC administrative actions against violators. While guidelines do not carry the weight of formal law, guidelines do define norms that will often trigger subsequent FTC regulatory investigations, and thus must be regarded by industry within the advertising risk management framework. That being said, the FTC admits that there is no set formula for a clear and conspicuous advertising disclosure. Don’t you relish ambiguity amidst federal regulation and potential for fines?

The FTC reiterates that general principles of advertising law apply online, but new issues arise almost as fast as technology develops and new issues have arisen concerning space constrained screens and social media platforms. No one would deny that most organizations intend for all of their advertising to fairly and accurately portray their products and services.

Complying with advertising law within the four corners of a typical print advertisement or within the storyboards of a video advertisement present a more limited range of challenges. The digital marketing frontier has introduced an infinite number of complex issues, including the more rapid evolution and retirement of technology hardware and software platforms. For example, many of us have become familiar with the rise of Apple and Android apps, even as app makers have decreased or eliminated the creation of BlackBerry apps.

Against this backdrop, the FTC places the burden of understanding and complying with the technological limitations of burgeoning online and mobile platforms upon the advertiser. Compliance monitoring and periodic internal audits should be embedded into your social media risk management strategy.

The major takeaways from this revised guidance as they apply to social media are:

·         The FTC Act’s prohibition on “unfair or deceptive acts or practices” encompasses online advertising, marketing, and sales.

·         Required disclosures must be clear and conspicuous.

·         If an ad is viewable on a particular device or platform, any necessary disclosures should be sufficient to prevent the ad from being misleading when viewed on that particular device or platform.

·         If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, then that platform should not be used to disseminate advertisements that require disclosures.

The prescriptive and restrictive nature of the FTC’s guidance requires advertisers to develop and test advertisements across the rapidly-evolving landscape of mobile devices, including tablets and smartphones. Ignorance of emerging technologies will provide no corporate defense to an FTC-initiated action in light of the explicit expectations expressed in the March 2013 guidelines.

The guidelines are well-written and provide a robust appendix of sample advertisement do’s and don’ts. But social media strategists will need to maintain a constant technological vigilance as new web-enabled technologies come to market. Otherwise, don’t be surprised if you receive a “Friend Request” from a new friend at the Federal Trade Commission and learn an entirely new definition of “clear, conspicuous, and proximate”.