FTC Workshop Examines "Dot Com Disclosures"
The Federal Trade Commission (FTC) held a workshop on May 30, 2012, to consider revisions to its 12-year-old online advertising disclosure guidelines, known as "Dot Com Disclosures." The 2000 guidelines target fraud and deception in online advertising. They focus on how disclosures should be made, and reflect FTC policy that an advertisement may be unlawfully deceptive or unfair unless certain disclosures are made effectively. For example, they call for required disclosures to be "clear and conspicuous," appearing in close proximity to the advertising representations that require them. The workshop examined how disclosures should be made on new social media platforms, on the mobile "small screen" and with respect to online advertising networks. The FTC accepted supplemental comments through July 11 and plans to issue an updated version of the Dot Com Disclosure guidelines this Fall.
New FTC Commissioner Maureen Ohlhausen's opening remarks stressed that consumers should be provided with clear and conspicuous information to make informed decisions, despite space constraints and the limitations of social media platforms. She observed that industry self-regulation is most effective when backed up by a law-enforcement presence.
The bulk of the workshop consisted of four panels moderated by FTC staffers, where participants expressed a range of perspectives on the need for various types of disclosures and how disclosures could effectively be made in different systems and circumstances. The panels nominally addressed "Universal and Cross-Platform Advertising Disclosures," "Social Media Advertising Disclosures," "Mobile Advertising Disclosures" and "Mobile Privacy Disclosures." The participant "stakeholders" included consumer advocates, advertisers, trade associations, social media platforms and academics.
Panelists generally urged the FTC to issue flexible, rather than prescriptive, guidance concerning the manner of online advertising disclosures. Industry representatives stressed that lengthy disclosures would be impractical and that operators must be free to develop approaches that work with their technology and business model. Businesses also noted the need for clarity in agency requirements in order to reduce uncertainty and avoid dampening innovation. Privacy advocates asserted that space and format constraints should be no excuse for failure to provide disclosures that are prominent, close to the relevant ad claim and delivered at the time when consumers are making their choices. They noted various formats, like "radio buttons" and bolded key terms, that can help a customer find and understand the terms of an offer.
Evidence was presented that consumers often expect companies to retain personal information that consumers make available online, but consumers often do not anticipate that such information will be shared with third parties. Consumers frequently do not understand privacy controls. The most reliable method for learning consumer preferences is to give them notice and a choice at the time data are collected, rather than at the time that an app is downloaded or when consumers sign up for service. Some panelists said that disclosures should be designed to limit consumer surprise.
Participants agreed that privacy disclosure "best practices" in mobile technology are in the early stages of development. Most hailed the recently announced agreement of the California attorney general and the six leading mobile application platforms-Amazon, Apple, Google, Hewlett-Packard, Microsoft and RIM-concerning the following statement of principles:
- Platform developers will each implement a method for application users to report to the platform developers any noncompliance by apps with their stated privacy policies, terms of service or other applicable laws.
- Platform developers will each implement a process for responding to reported instances of application developers' noncompliance with privacy policies and/or applicable law.
These principles are designed to foster innovation in privacy protection, promote transparency in privacy practices and facilitate compliance with privacy laws in the mobile arena.
Some panelists urged greater disclosure of more "invasive" types of personal data collection, such as location data tracking or access to contact lists on a smartphone. The merging of offline and online shopping habits also was identified as a sensitive area. Providers of mobile application platforms were identified as gatekeepers that could impose a minimal level of privacy protection as a condition for making an app available to a user community.
Mary Engle, associate director, FTC Division of Advertising Practices, closed the workshop by summarizing the goals and themes that emerged. She noted that context matters, and what is regulated and how it is regulated depends on the device, the consumer and the product. The contextual nature of advertising disclosures makes bright-line guidance difficult. Engle stressed, however, that the FTC's goal in updating the guidance is to provide useful information and not just say, "It depends." Engle summarized the conclusions of the workshop, including:
- New platforms must adapt to the law and not vice versa. Consideration should be given to draft advertising claims so that clarifying disclosures are not needed.
- Disclosures should take into account typical consumer behavior in a particular mobile environment. It is also important to find a balance between providing too much information and not enough. The timing of when disclosures are made is also important.
- Where a full disclosure does not fit within a prescribed format, some sort of link with an attention-getting label must be provided to the full disclosure. Accessible, informative disclosures will create a more positive experience for mobile customers.
- Standard icons or keywords for advertising disclosures could work, but should be tested for effectiveness and would require some degree of consumer education, for which someone must be responsible.