Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Ramirez Addresses Deceptive Advertising Practices, Calls for Effective “Do Not Track” System, (Apr 17, 2013)

By Tobias J. Gillett, J.D., LL.M.

FTC Chairwoman Edith Ramirez discussed the FTC’s recent efforts to curb deceptive advertising practices and urged stakeholders to work toward creation of a robust "Do Not Track" system for online advertising in a speech today before the American Advertising Federation in Washington, D.C.

Ramirez began her speech by emphasizing the importance of reputation to advertisers and their clients. She noted that deceptive practices could hurt not only consumers, but also the reputation of advertisers, clients, and entire industries.

She then proceeded to discuss the FTC’s efforts to educate businesses regarding best practices and means to comply with the law. She noted the recent rapid growth in mobile advertising, and the FTC’s February 1, 2013 report presenting best practices for mobile privacy disclosures. She expressed the FTC’s hope that the report would encourage stakeholders, "led by the Department of Commerce, to develop a self-regulatory code of conduct on mobile transparency."

She also discussed the FTC’s March 12, 2013 updates to its Dot Com Disclosures, which provide guidance to businesses on complying with their online advertising disclosures responsibilities. She explained that the guidance mandates the same disclosures for online advertising that are required for advertising in other formats, and that the FTC’s "guidance comes down to common sense." Among other requirements, the disclosures must be clear, conspicuous, and "as close as possible" to the claims they qualify, and a platform should not be used if it does not permit such disclosures. Hyperlinks to disclosures and forcing consumers to scroll to see disclosures should be avoided.

Having reviewed the FTC’s online and mobile advertising guidance, she turned to the FTC’s October 1, 2012 guidance regarding the use of environmental marketing claims, known as the Green Guides. The guidance discourages the use of blanket claims that could mislead consumers into believing a product has no negative impact on the environment, according to Ramirez. Instead, the guidance recommends clear language limiting a claim to a specific benefit, avoiding the implication "that any specific benefit is significant if it is, in fact, minor." For the same reason, advertisers should avoid using "environmental certifications or seals that are not clear about the basis for the certification." Ramirez also highlighted the Green Guides’ guidance regarding renewable energy claims, noting that "marketers should clearly specify the percentage of renewable energy that powered the manufacture of the product or package," rather than simply stating that the product was "made with renewable energy."

Ramirez also noted another sign of change in the FTC’s recent complaints filed against Neiman Marcus and two other retailers (which the retailers have agreed to settle) for allegedly violating the Fur Products Labeling Act by describing clothing as containing only fake fur when it actually consisted in part of real fur.

She then proceeded to address the FTC’s recent advocacy of a "Do Not Track" solution to the collection of consumers’ online behavioral data. Ramirez observed that consumers’ unease regarding online tracking could undermine their trust in advertising. Moreover, online publishers have complained about their lack of control over the collection of data from their websites, and the "profusion of tracking cookies on websites can slow down the loading of web pages," leading to lower conversion rates, according to Ramirez.

The Commissioner noted that the FTC’s late 2010 call for the creation of a "persistent Do Not Track mechanism that would apply across industry to all types of tracking; be easy to find and use; be effective and enforceable; and allow consumers to stop the collection of nearly all behavioral data gathered across sites" had led browser developers, the Digital Advertising Alliance, and mobile device manufacturer Apple to make changes to give consumers the ability to limit tracking.

However, Ramirez observed that consumers still lack "an effective and functioning Do Not Track system." She noted that the Tracking Protection Group of the World Wide Web Consortium (W3C)—as well as ad networks, analytics companies, web publishers, browsers, social networks, and privacy groups—have been involved in an ongoing effort to develop a self-regulatory Do Not Track standard.

Ramirez called for all stakeholders to "take advantage of this venue to work toward consensus on a Do Not Track tool that gives consumers effective and meaningful privacy protection."

"I therefore urge all players in the online advertising ecosystem to dive into the W3C process with good faith and a resolution to hammer out their differences to develop a transparent Internet advertising system that meets the needs of consumers and advertisers alike," Ramirez concluded.

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