What a tangled Web we weave, when first we advertise to deceive.

• Author: Connelly, Michael W.

While an ever-increasing number of companies have embraced the Internet as an advertising tool, the Federal Trade Commission's recent investigations into the online advertising practices of several large companies, such as the highly publicized enforcement of federal consumer-protection laws against Yahoo! and Amazon.com, have left many advertisers wondering if they could be next.

The unique properties of the Internet as an advertising medium, which allow companies to effectively use e-mail and Web sites to reach existing and prospective customers, have created a fair amount of confusion over the rules and regulations that must be followed. In addition, the highly publicized abuse of Internet advertising tools, such as the practice of spamming, has not only led to a public-perception problem but a new patchwork of legal rules that must be followed.

FTC offers guidance

To address public concerns over deceptive online advertising, the Federal Trade Commission issued a working paper, Dot Com Disclosures: Information about Online Advertising, on May 3 of this year. The report reiterates the FTC's position that current trade regulations and laws are just as applicable to Internet advertising as they are to non-electronic forms of advertising, such as print media or television advertisements. The report confirms that the basic principles of fair advertising apply to online advertising: Advertisements must be truthful and not misleading, advertisers must be able to substantiate their claims and assertions with actual proof of the truth of their claims, and advertisements cannot be unfair to the consumer.

Section 5 of the Federal Trade Commission Act prohibits both unfair and deceptive acts or practices in, or affecting, commerce. While the application of Section 5 to online commerce has never been realistically challenged, the Internet presents problems and opportunities not found in other advertising venues. While recogni-zing the unique nature of the Internet and its inherent limitations, the report states that the act's prohibition of "unfair or deceptive acts or practices" encompasses Internet advertising, marketing and sales. The report also establishes that other guides and rulings issued by the FTC for practices in other media (for example, the Mail- or Telephone-Order Merchandise Rule and Guides Concerning the Use of Endorsements and Testimonials in Advertising) also apply to Internet-based advertising.

Clear and conspicuous advertising

So...