:: By David O. Klein ::

The Federal Trade Commission (FTC) and state attorneys general across the country have made it clear that businesses using advertisements considered to be misleading or deceptive will be subject to stiff penalties, including big fines.

The Three P’s
First and foremost, you must be certain that all claims made in your advertising materials are truthful and substantiated. For example, clinical studies that support health and beauty product claims are necessary. This will often require disclosures in your advertising, and those disclosures must be presented both clearly and conspicuously. To that end, the FTC advises advertisers to consider the following three factors, which you can think of as the “three P’s”:

• placement of the disclosure in the advertisement;
• proximity of the disclosure to the applicable claim; and
• prominence of the disclosure.

In connection with these factors, you should consider:

• whether the design of the advertisement draws attention away from the disclosure;
• whether the advertisement is so long that it requires repetition of the disclosure; and
• whether the disclosure is easy to understand.

As far as the first two “P’s,” placement and proximity, you should ensure the disclosure appears directly adjacent to, or close to, the relevant claim. That said, like many disclosures on television and radio, these can be lengthy; requiring consumers to scroll down to view the entire disclosure. In those cases, you should use explicit instructions regarding the need to scroll down, as opposed to a general statement, such as “see below for details.”

Hyperlinks may be used to communicate some disclosure information. However, any disclosures that are an integral part of a claim or inseparable from it, such as additional costs that apply to a transaction, should be placed directly next to the applicable claim.

Where consumers are able to purchase goods or services via the website on which you are advertising, you should never rely solely on a hyperlink to communicate pricing information. All pricing information, including any additional costs that may apply, should appear directly above the submit button. In addition, you should provide information, or access to information above the submit button regarding how the consumer’s data may be used by you and your business partners. To this end, it is important to communicate to consumers that by clicking the submit button, they are providing their expressed, informed consent to your disclosed billing and privacy practices.

Further, you must be careful when using the word “free” in connection with the product or service being advertised. Be sure that all terms, conditions and obligations upon which the free offer may be contingent appear in close proximity to the offer presented in the advertisement.

Regarding the third “P,” prominence, the onus is on the advertiser to draw the consumer’s attention to the disclosures. Be sure it does not get lost within the rest of the advertisement. The important thing to remember is consumers should not have to go out of their way to hunt it down. To avoid this, you may need to repeat the disclosure.

Be aware that simply providing a disclosure may not always be enough. The average consumer must be able to fully understand the terms of the disclosure. To accomplish this, use simple and easy-tounderstand words and sentences. If consumers are unable to understand what is being disclosed to them, the entire advertisement may be considered deceptive.

E-Mail Disclosures
Advertisers that use e-mail marketing are subject to additional deceptive advertising laws. The federal CAN-SPAM Act of 2003, as amended, sets forth specific requirements that must be followed when advertising via e-mail, as well as penalties for those who violate the statute. Under CAN-SPAM, the use of false or misleading header information is prohibited. In other words, you must indicate the identity of the sender in all e-mail marketing messages.

Additionally, your subject line should accurately reflect the products or services advertised in the e-mail. Clearly and conspicuously identify the e-mail as an advertisement, provide a valid physical postal address for the sender and provide consumers with a mechanism for opting out from the receipt of future commercial e-mail.

Please note this is only a brief overview of some of the legal issues surrounding deceptive advertising on the Internet. Remember to obtain guidance from a licensed legal professional prior to developing and publishing online advertising.

About the Author: David O. Klein is a partner, and David C. Rimas an associate, with the firm of Klein Zelman Rothermel LLP in New York, New York, where they practice Internet Marketing Law. David O. Klein can be reached at (212) 935-6020 or via e-mail at dklein@legal.org.