Competition/antitrust enforcement agencies in both the U.S. and Canada have been increasing their focus on new media advertising/marketing practices, notably in the mobile space.
In Canada, recent cases and initiatives include the ongoing challenge by the Competition Bureau of Bell/Rogers/Telus for allegedly misleading premium text claims, statements by the Interim Commissioner of Competition that one of the Bureau’s advocacy priorities includes the digital economy and Federal Government and regulatory (CRTC) initiatives to spur increased wireless competition.
In the midst of these Canadian developments, the U.S. Federal Trade Commission has as well recently been increasing its focus on the digital economy, which has updated “Dot Com Disclosures” and a new video several days ago with advertising and privacy law tips for mobile app developers (see: FTC Staff Revises Online Advertising Disclosure Guidelines and FTC Announces Video With Tips for Mobile App Developers).
In Canada, the equivalent to the FTC’s new Dot Com Disclosures are the Competition Bureau’s Internet Advertising Guidelines (Application of the Competition Act to Representations on the Internet), which was last updated back in 2009 (though has not been substantially updated in some years).
The FTC’s new guidance for mobile and other online advertisers, which updates its Dot Com Disclosures released back in 2000, not only explains how advertisers can make sure their products and services are described truthfully online, but more specifically takes smart phone and social media marketing into account.
The FTC’s new .com Disclosures: How to Make Effective Disclosures in Digital Advertising provides a number of best practices for disclosures in mobile ads and highlights the need for advertisers to make those disclosures clear and conspicuous.
Some of the FTC’s tips, many (if not most) of which are also applicable in Canada, include:
Place disclosures [i.e., disclaimers as we call them in Canada] close to claims they qualify in an online ad: Consumers using devices with small screens may miss disclosure hyperlinks that are separated from a claim by text or graphics, so advertisers should be sure to place the link near the relevant information. This is good advice for conventional advertising, and particularly important guidance for advertising using new media (including for Canadian advertisers/marketers).
Discourage scrolling: Because of their small size, smart phone and tablet screens might require horizontal and vertical scrolling, making a disclosure in a different column difficult for consumers to read if they have to scroll or zoom in. The FTC explains that advertisers should discourage scrolling to view disclosures and optimize websites for mobile devices. The Canadian competition Bureau has also expressed concerns with scrolling marquees and disclosure, and emphasized that important disclosure should be clearly disclosed (which can be problematic with scrolling marquees or similar disclosure).
Consider how the ad is viewed on different devices when hyper-linking to a disclaimer: Will the ad work on various devices? Mouse-overs, for example, might not work on mobile devices without a cursor to hover over the link. Advertisers should also not use blockable pop-up disclosures. Again, in Canada, as in other jurisdictions, a tip for minimizing advertising issues is to take some commonsense care to ensure that effective disclosure is made according to the medium. What may be effective for print may not be effective for mobile, and what may be effective for mobile may similarly not be effective for some types of social media. For example, when I help companies and agencies with promotional contests, I commonly ask initially what media they want to use for the promotion (which informs potential disclosure and misleading advertising issues).
Watch out for technological limitations: Some devices may not support certain ways of displaying disclosures (such as Adobe Flash Player).
Display disclosures before a consumer makes a purchase. This guidance from the FTC is similar to that made over the years from the Competition Bureau, which has included a desire to see key disclosure for certain types of promotions (notably contests) made before a consumer has purchased a product, visited a retail outlet or been otherwise inconvenienced. In short, tell consumers what they are going to get, for how much and disclose any key limitations before buying the product.
If using a space-constrained ad (like a Tweet), display the disclosure in the ad itself, or clearly on the website to which the ad links.
Pay attention to prominence: Look at the size, colour and graphics of the disclosure, relative to other parts of the mobile site – they should be comparable. Advertisers should make sure the disclosure is not too small to be read on a mobile device. This theme has also been key for the Canadian Competition Bureau, which has increasingly been focusing on the importance of complete disclosure in “banner” or “headline” claims, minimizing the use of disclaimers for important disclosures and is increasingly challenging advertising based on allegedly false general impressions. In this regard, in Canada, advertising can be challenged under the Competition Act where a representation is literally false or misleading or the “general impression” of a claim overall is false or misleading.
Use clear language (no legalese or technical jargon). Courts in Canada and the Competition Bureau have taken a similar position, both in the past and in recent cases (e.g., by the Ontario Superior Court in the Yellow Pages Marketing case and by the Bureau in the ongoing Rogers performance claims case).
For multimedia campaigns, such as audio messages or videos, the FTC highlights the fact that consumers may be viewing, reading or listening through multiple media (TV, smart phones or the web) and, as such, advertisers should be sure that disclosures are made clearly on each type of ad. The FTC also notes some special considerations, such as paying attention to volume and cadence of disclosure in audio ads and displaying visual disclosures for a sufficient amount of time.
Mobile app developers might also take note of a new FTC video that provides both established and start-up companies with information on how to comply with Truth in Advertising standards and privacy principles. Once you start distributing an app, says the FTC, you’re an advertiser. Ads, it says, aren’t just TV spots, but anything a company tells a prospective customer about what a product can do – in an app store, or even a feature like a privacy setting or control that you’ve built into the app.
These core principles are also the same in Canada, as the “general misleading advertising” provisions of the Competition Act apply not only to advertising claims, but any claims to the public (which can be as few as one person), as well as claims made to promote any business interest.
Some of the U.S. FTC’s guidelines for app developers include: telling the truth when talking about your product; and looking at your product and advertising from the average user’s perspective (and if making objective claims about an app, make sure you have solid proof to back them up before you start distributing it).
When it comes to disclosures, the FTC also says app developers should display key information about a product clearly and conspicuously. While it says the law doesn’t dictate font or type size, the FTC says it has taken action against companies that buried important terms in long licensing agreements or in dense blocks of legal “mumbo jumbo.” This comment is reminiscent of one of the Canadian Bureau’s challenges to disclaimers in the ongoing Rogers performance claims case, where the Bureau has taken the position that certain disclosures made by Rogers regarding the performance of its Chatr cell phone brand would be “meaningless” to average consumers. Whether that will be held to be the case remains, however, to be seen following the trial in that case.
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I am a Toronto competition/antitrust lawyer and advertising/marketing lawyer who helps clients in Toronto, Canada and the US practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
My Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
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