Online Advertising

Online advertising includes any marketing efforts that involve sending advertisements to consumers through websites, email, advertising software, or cellphones. The Federal Trade Commission ("FTC") has the authority to regulate online advertising under the Federal Trade Commission Act, under 15 U.S.C. §§ 41-58. This federal statute is not limited to a specific medium, so the FTC monitors traditional print and online publications, including advertisements, marketing activities, and general sales campaigns. The aforesaid Act may even grant the FTC authority to govern "direct mail advertisements" that advertisers send through emails. Accordingly, the FTC published Dot Com Disclosures, a guide to applicable standards for online advertising. The guide focuses on defining the terms "clear and conspicuous" in order to offer practical tips on how to make effective disclosures online.

The FTC outlines factors that can help indicate whether an online-advertisement and its disclosures are clear and conspicuous. First, online-advertisers should consider whether a single disclosure is enough, or whether it would be clearer for the average consumer to have multiple disclosures throughout the site. If other features on a site distract from the disclosure, it is likely unclear and therefore does not meet the FTC standards. The location of the disclosure and its proximity to the advertisement is relevant. It is generally inconspicuous if consumers must click a link or navigate to another site to reach the disclosure. The disclosure's degree of importance will also govern how much clarity is necessary.

Online advertisements must follow three principles. First, an online advertisement must be truthful and cannot be misleading. The standard is also the average consumer. Therefore, if an advertisement would confuse the average consumer and that confusion would manipulate the consumer's decision regarding a product, then the advertisement is misleading. Next, online advertisers must be able to support any claims they make in an advertisement. If the average consumer could reasonably interpret the advertisement more than one way, the advertiser bears the burden of providing proof for each reasonable interpretation. Finally, online advertisements must be fair. According to the FTC, this means that advertisers must disclose all relevant information regarding the product, such as hidden fees.

On December 19, 2012, the FTC amended the Children's Online Privacy Protection Rule of 1998 to enhance children's online privacy, in response to growing technology and social networking. The amendments give parents greater control over the information websites may gather about children under thirteen years of age. For example, the final amendments focus on the following items:

  • Modify the list of "personal information" that cannot be collected without parental notice and consent, clarifying that this category includes geo-location information, photographs, and videos;
  • Offer companies a streamlined, voluntary and transparent approval process for new ways of getting parental consent;
  • Close a loophole that allowed kid-directed apps and websites to permit third parties to collect personal information from children through plug-ins without parental notice and consent;
  • Extend coverage in some of those cases so that the third parties doing the additional collection also have to comply with COPPA;
  • Extend the COPPA Rule to cover persistent identifiers that can recognize users over time and across different websites or online services, such as IP addresses and mobile device IDs;
  • Strengthen data security protections by requiring that covered website operators and online service providers take reasonable steps to release children's personal information only to companies that are capable of keeping it secure and confidential;
  • Require that covered website operators adopt reasonable procedures for data retention and deletion; and
  • Strengthen the FTC's oversight of self-regulatory safe harbor programs.

These amendments go a long way towards updating relevant cyber laws, which were drafted before the expansion of technology which is so prominent today.