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New FTC Rules For Online Native Advertising

December 27, 2015

The Federal Trade Commission (FTC) recently issued guidelines regarding native advertising in a recent enforcement policy statement. These guidelines, more a reaffirmation of previous FTC enforcement actions, are aimed at regulating “promotional messages integrated into and presented as non-commercial content.” This policy statement relies on the FTC’s authority to regulate deceptive commercial practices.

Native advertisements have been used for decades in print media (and are referred to by the portmanteau “advertorial“). But the FTC believes the emergence of native advertisements online pose problems for consumers because native advertisements “mask the signals consumers customarily . . . rel[y] upon to recognize an advertis[ement] or promotional message.” This sometimes makes it extremely difficult for consumers to differentiate between actual content and advertisements, and are therefore deceptive:

Regardless of the medium in which an advertising or promotional message is disseminated, deception occurs when consumers acting reasonably under the circumstances are misled about its nature or source, and such misleading impression is likely to affect their decisions or conduct regarding the advertised product or the advertising.

The FTC policy statement explains that an advertisement’s format is deceptive if it materially misleads consumers about the advertisement’s commercial nature. In conclusion, the FTC issued guidelines that can help businesses avoid deceiving consumers:

Deception occurs when an advertisement misleads reasonable consumers as to its true nature or source, including that a party other than the sponsoring advertiser is the source of an advertising or promotional message, and such misleading representation is material. In this regard, a misleading representation is material if it is likely to affect consumers’ choices or conduct regarding the advertised product or the advertisement, such as by leading consumers to give greater credence to advertising claims or to interact with advertising with which they otherwise would not have interacted.

Advertisements that fall into this category of deceptive marketing are deceptive even if the communicated value of the advertisement is truthful and non-misleading.

The FTC vote approving the policy statement was unanimous (4-0).

Corey Varma

Corey Varma is an attorney that focuses on Information Technology and Privacy, Cyberspace, Social Media, and Intellectual Property law.

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