Advertising Disclosures

Advertising disclosures required by the Federal Trade Commission are becoming numerous.  As creativity increases so will the efforts for the FTC to find aspects, not to their liking.  As the FTC pursues companies using native advertisers or influencer programs, restrictions will appear clearer to businesses.  FTC’s concern is over the possibility of consumers being confused or deceived by ads that do not appear as ads but as story lines and such.  The FTC’s native advertising guidelines state that under its FTC Act, “an act or practice is deceptive if there is a material misrepresentation or omission of information that is likely to mislead the consumer acting reasonably in the circumstances.  A misrepresentation is material if it is likely to affect consumers’ choices or conduct regarding an advertised product or the advertising for the product.”

As their guidelines state, that the information conveyed is seen as well as to how it is conveyed.  It is the means of conveying the message that could lead to consumer deception.  Greater disclosure is seen by the FTC as a needed piece to prevent consumers from being misled.  Therefore the FTC is pushing for clear disclosures revealing the source of the representation in the ad.  What the FTC is zeroing in on are ads that make it appear that the representation is independent of a company’s product or service being conveyed to the general public.  The public should be aware that an ad is a sponsorship of the service or product paid by the company.

There have been several companies that the FTC has targeted, i.e., Machinima, Lord & Taylor, and Warner Bros.  The FTC sought Machinima for ways of promoting Xbox through influencers without adequate disclosure to the general public.  Lord & Taylor was found to have not disclosed the nature of its Nylon Instagram ads where influencers were paid by Lord & Taylor to post.  Warner Bros. was seen to have not disclosed the sponsor for video in a conspicuous manner.  Digital advertising through Internet means using platforms such as YouTube, Twitter, and even Facebook is not going away.  But the FTC will continue to eye the hidden relationship between a paid sponsorship and a nonpaid sponsorship.  The ease in which a company can influence consumer choice and consumer spending through digital means and the opportunities for fraud on the Internet cause concern for consumer protection advocates.  Disclosure of the source of the comment stated in a video promoting a product or service will be required in order to ensure that the general public recognizes it is viewing paid subjective content rather than non-paid objective content.

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