Antitrust Law Daily Wrap Up, ADVERTISING NEWS: FTC warns advertisers to make adequate disclosures, (Sep 23, 2014)

By Greg Hammond, J.D.

More than 60 companies will be receiving a warning letter from the FTC for failing to make adequate disclosures in their television and print ads. The letters are part of the Commission’s “Operation Full Disclosure” initiative, which has been designed to make sure advertisers comply with federal law and do not mislead consumers. According to the Commission, the names of the letter recipients have not been released.

“Consumers depend on information in advertising to make their buying decisions – whether it’s computers or cleaning products, televisions or tools, hotel rooms or hair care,” stated FTC Bureau of Consumer Protection Director Jessica Rich. “Through efforts like these, the Federal Trade Commission ensures that consumers can have confidence that the ads they see are not hiding important information.”

The FTC noted a number of problems in various television and print advertisements staff reviewed. Some companies did not adequately disclose the conditions for obtaining quoted prices, failed to disclose the requirement of automatic billing features, or having to purchase an additional product or service. Others failed to disclose how narrow a category was defined when claiming their product was unique or superior in a product category, or failed to inform consumers of the basis of their comparisons. Further, some advertisers promoted free trial periods, but did not disclose that consumers were required to pay for shipping or returns. In other cases, ads failed to adequately disclose: the weight loss consumers could generally expect to achieve; safety or legality issues of a product; and alterations made in product demonstrations.

According to the Commission, the letters identified advertiser’s problematic ads; recommended that the companies review their ads to ensure that required disclosures are “clear and conspicuous”; and requested that the companies inform the FTC of actions they intend to take regarding their advertising.

The Commission noted that disclosures should be “close to the claims to which they relate – not hidden or buried in unrelated details.” Further, disclosures should be made in a font that is easy to read and in a shade that stands out from the background; should be on the screen long enough to be noticed, ready, and understood; and should not be obscured. To meet the “clear and conspicuous” standard, companies’ disclosures should be made using clear and unambiguous language, and should stand out in the ad. “[C]onsumers should be able to notice disclosures easily,” the FTC said. “[T]hey should not have to look for them.”

News: Advertising ConsumerProtection FederalTradeCommissionNews