Use of Disclosures

• Pages: 101-117

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CHAPTER IV

USE OF DISCLOSURES

A. Introduction

In advertising, disclosures remain an indispensable tool used by

advertisers to augment, explain, and clarify the information contained in

the advertisement. Disclosures, ranging from short phrases such as

“some restrictions apply” to long descriptions of the potential side effects

of a prescription medication, for example, traditionally appear in small

print at the bottom of a print advertisement, superimposed onscreen

during a television or internet advertisement, in a voiceover at the end of

a radio or television commercial, or some combination of these.

Advertisers making use of disclosures should bear in mind two

cardinal rules:

First, to be effective, a disclosure must be clear and

conspicuous and in close proximity to the claim it modifies.

Second, it is never proper for an advertisement to use a

disclosure to contradict an advertisement’s message or to

clear up false impressions that an ad might otherwise leave

behind.

Failure to disclose material information, appropriately and

accurately, can lead to claims of false advertising, whether from a

competitor, a regulatory or governmental body, or an aggrieved

consumer in a class action suit. Examples abound of advertisements that

were found to be false or misleading because of inadequate disclosures.

Federal courts, the Federal Trade Commission (FTC), and self-

regulatory bodies, such as the National Advertising Division of the

Better Business Bureau (NAD), apply similar standards for determining

whether disclosures are effective. Section B of this chapter discusses

FTC, NAD, and federal court precedent regarding disclosures, and offers

recommendations on how to craft disclosures that will pass muster with

courts and regulators.

Disclosures online and on the small screens of mobile devices and

other devices are of increasing concern to regulators. The FTC in 2013

updated its Dot Com Disclosures guidelines, originally issued in 2000.

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Advertising Claim Substantiation Handbook

Section C of this chapter addresses guidelines relating to disclosures for

online advertisements, mobile devices, and other devices, as well as

other issues regarding online and mobile disclosures. It also reviews

other FTC guidance on disclosures in connection with endorsements and

environmental claims, as well as claims involving “free” products or

services.

In addition, there are rules governing specific kinds of advertising—

such as negative option (opt-out) marketing or claims directed at

children. Section D of this chapter discusses disclosure requirements

some of those special categories of advertising.

B. Standards for Effective Disclosures

1. The FTC’s Standards

The FTC defines false advertising as “a representation, omission or

practice that is likely to mislead the consumer acting reasonably in the

circumstances, to the consumer’s detriment.”1 Furthermore, the

“representation, omission or practice must be a material one for

deception to occur.”2

In evaluating whether an ad is likely to mislead, the FTC considers

the advertisement as a whole, including words, pictures, and phrases as

well as any disclosures, to make sure that the “net general impression

conveyed” by the ad is clear and accurate.3 Disclosures may augment or

clarify the message, but they cannot be used to contradict the message

reasonably conveyed by the advertisement. 4

1. FED. TRADE COMM’N, FTC Policy on Deception (Oct. 14, 1983),

available at http://www.ftc.gov/bcp/policystmt/ad-decept.htm.

2. Id.

3. Standard Oil of Cal., 84 F.T.C. 1401, 1471 (1974), aff’d as modified, 577

F.2d 653 (9th Cir. 1978), reissued, 96 F.T.C. 380 (1980); Fed. Trade

Comm’n, Advertising FAQ’s: A Guide for Small Business (2001)

available at http://business.ftc.gov/sites/default/files/pdf/bus35-advert

ising-faqs- guide-small-b usiness.pdf.

4. FTC Policy on Deception (Oct. 14, 1983), available at

http://www.ftc.gov/bcp/policystmt/ad-decept.htm.