FTC Warns Sellers to Make Disclosures “Clear and Conspicuous”

 For the past two weeks MrConsumer has been ranting about retailers that don’t disclose key information in their ads in a “clear and conspicuous” manner. Last Tuesday, the FTC must have heard his yelling and screaming, and sent letters to over 60 companies warning them to clean up their ads. (We asked the FTC for a copy of the letter, but they refused.)

From their blog, here (only slightly excerpted) is the FTC’s message to companies about their obligation to make disclosures in their ads “clear and conspicuous.”

If the disclosure of information is necessary to prevent an ad from being deceptive, the disclosure has to be clear and conspicuous. That shouldn’t be news to any advertiser and certainly not to the 60+ companies – including 20 of the 100 biggest advertisers in the U.S. – that received warning letters as a part of the FTC’s Operation Full Disclosure. But whether your company heard from us or not, there are lessons to learn from our latest effort to ensure advertisers abide by time-honored legal principles.

Operation Full Disclosure included TV ads, print ads, ads in Spanish, and ads for a wide range of products and services – food, drugs, household items, consumer electronics, personal care products, weight loss products. It ran the gamut. And here’s what we found: A lot of ads included potentially misleading statements that advertisers tried to “fix” with problematic fine print.

Some ads quoted prices, but didn’t adequately disclose the strings that were attached. Others showed optional accessories, but didn’t adequately disclose that people had to buy extras to get the advertised benefit. Still others featured best-case-scenario consumer testimonials, but didn’t adequately disclose the results people could generally expect to achieve. We also spotted ads that included on-camera demonstrations without adequately disclosing material alterations. And that’s just for starters.

Here’s a practical way to think of it. If a disclosure is truly clear and conspicuous, consumers don’t have to hunt for it. It reaches out and grabs their attention. One mnemonic we use – The 4Ps – can help sharpen advertisers’ focus on four key considerations:

Prominence. Is the disclosure big enough for consumers to read easily? The fine-print “disclosure” and its TV cousin, the fleeting super, have long been the subjects of FTC law enforcement. Consumers shouldn’t have to scan an ad with a magnifying glass to pick up on material details of the deal. TV advertisers face the additional wild card of varying screen sizes. Regardless of whether a person is looking at the ad on a home theater system or a handheld device, small type can be easy to overlook. Furthermore, consumers shouldn’t have to be speed readers to grasp the message. FTC cases have challenged supers that flashed for just a brief period, lines of fine print on a single screen, and hard-to-read sentences over multiple screens. Consider contrast, too. White text on a light or variegated background isn’t likely to be noticed. Nor will a fine-print statement that has to compete with a dynamic and distracting image.

Presentation. Is the disclosure worded in a way that consumers can easily understand? Using legalese or technical terminology reduces the likelihood that consumers will get the message. Burying important information in a dense block of text is another common tactic that signals “don’t read me.” In one FTC settlement, for example, material information about the terms of the transaction appeared after an advertiser’s long litany of trademark information. In another case, a company used an intricately embellished all-caps font. That may be fine for the logo of a heavy metal band, but it’s not a presentation designed to convey critical information to consumers.

Placement. Geography matters. Is the disclosure where consumers are likely to look? An FTC settlement challenged as ineffective a key disclosure that ran down the side of a print ad perpendicular to the main text. Another case dealt with information conveyed in small type in the upper left corner of a full-page newspaper ad. And given all the talk about footnotes, the bottom of the page or screen isn’t a place most consumers will look.

Proximity. Is the disclosure close to the claim it modifies? Tiny type aside, another problem with footnotes is their distance from the prominent headline or splashy text designed to draw the consumer in. If you need to include key qualifications or conditions, remember this maxim: What the headline giveth, the footnote cannot taketh away. And don’t think an asterisk will always solve the problem. There’s a reason it’s called an aste-risk.

Now for the nitty-gritty. So just how big does a disclosure have to be? 4 point, 8 point, 12 point? What’s better: Times New Roman? Helvetica? How many seconds does it have to be on the screen? We get those questions all the time. But there are three reasons why advertisers who focus on the details may be missing the big picture.

“Clear and conspicuous” is a performance standard, not a font size. A disclosure is clear and conspicuous if consumers notice it, read it, and understand it. Do you really want the FTC staff dictating the specifics of your ad campaign? We didn’t think so. Aside from a few rules that mandate detailed disclosure standards, the “clear and conspicuous” ball is in the advertiser’s court. As long as consumers looking at the ad come away with an accurate understanding, companies have substantial leeway in how they communicate their marketing message. That’s why we think it would be a mistake to impose a one-size-fits-all approach.

Who knows better than advertisers how to convey information clearly and conspicuously? The “clear and conspicuous” standard allows advertisers to use their limitless creativity to integrate important information into the overall campaign. Even so, we often hear them say “But we don’t know how to make a disclosure clear and conspicuous.” Our response: Really? Really? Advertisers’ stock in trade is the ability to use the tools at their fingertips – text, sound, visuals, contrast, or color, to name just a few – to convey information effectively. One practical observation: Consider looking at it from another perspective. How would you send the message if you really wanted to, rather than because you think you have to? Approaching the disclosure as a key piece of information you want to convey may make it easier to ensure it’s clear and conspicuous.

When in doubt, rethink your ad claim. If you find yourself struggling with how to craft an effective disclosure, why not take a step back and consider what the need for a disclosure may be telling you. Perhaps it’s pointing to a potential for underlying deception in your ad claim. Sometimes all it takes is a slight wording change to make a disclosure unnecessary in the first place. And just think how refreshing consumers would find an ad free of fine print.