MICHAEL GEIST
Thursday, June 1, 2000
Internet advertising is capturing a growing share of marketing budgets, challenging regulators to effectively adapt off-line advertising rules to the dot-com world.
The U.S. Federal Trade Commission (FTC) recently released comprehensive guidelines that provide marketers with a helpful roadmap to ensure that their on-line advertising falls squarely within current regulations.
Canadian advertising laws share the same fundamental principles as those in the United States, so this new FTC initiative should resonate both with Canadian e-commerce businesses who advertise south of the border and those who restrict their advertising to the Canadian market.
As the first clear indication of how off-line advertising rules can be applied on-line, the guidelines are likely to serve as a benchmark for regulators worldwide. They should occupy a prominent place in the minds of on-line advertisers crafting the latest dot-com marketing campaign.
The FTC guidelines begin with the premise that all prevailing advertising regulations -- unfair and deceptive practice legislation as well as solicitation restrictions -- apply equally off-line and on-line. In fact, it assures the public that the "fine print" is readily adaptable to the on-line environment.
The basic principles of advertising, that it be truthful, fair, and easily substantiated, remain inherent in the FTC's approach. However, the commission admits that the Internet is different and that the regulations must be adapted to meet the challenges posed by hyperlinks, banner ads, audio and video.
Ensuring that advertising disclosures remain as effective on the Internet as they are off-line is the most critical issue the FTC faces in this context. Off-line advertisers must disclose any limits to express and implied claims found in their advertisements to ensure that they do not mislead the public. This results in the ever-present "fine print" that typically accompanies advertisements for pharmaceutical products, motor vehicles, sale flyers, and contests.
To achieve an equally effective on-line disclosure, the FTC report highlights several requirements, including the placement and prominence of the disclosure on the Web page, its proximity to the claim, and whether the disclosure is rendered ineffective by virtue of too many distractions on the Web page.
Web sites that bury their disclosures out of sight at the bottom of the page are the target of special scrutiny. Sites that discourage scrolling by leaving large sections of blank space -- implying that there is nothing further on the page -- will not meet the effective disclosure standard.
The use of hyperlinks is also of particular concern. The FTC recognizes that disclosures may often be shuffled off to an entirely separate page, connected only by a hyperlink. It therefore cautions against separating the claim from the disclosure where it is an integral part of the claim. In other instances, it recommends using an obvious label for the link and placing the link close to the claim.
Although most Internet users have browsers that support features such as frames and Java, the use of such technologies is not yet universal. The FTC fears that some consumers may miss pertinent information if disclosures exist only within these newer technologies. It advocates resisting the use of new technologies or features that have not achieved widespread marketplace penetration.
Not surprisingly, the ubiquitous banner ad, probably the most common (and some would say least effective) form of Internet advertising, does not escape the FTC's attention. The guidelines recommend inserting disclosures within banner ads where practicable. Where a transaction may be conducted within an interactive banner ad without clicking through to the sponsoring Web site, the disclosure must appear within the banner ad.
The FTC's approach to inserting legal terms as part of the on-line contracting process is also noteworthy. It cautions e-commerce businesses against waiting until the user arrives at the order page to reveal the complete slate of terms and conditions. It recommends instead closely tying the terms to the product display as well as ensuring that users can access the terms from several places on the site.
Michael Geist is a law professor at the University of Ottawa Faculty of Law specializing in Internet and electronic-commerce law. He can be reached at mgeist@uottawa.ca and on the Web at http://www.lawbytes.com.
