Federal Trade Commission

I talk here on Madison Ave Insights all of the time about the importance of mobile and social media for advertisers.  Technology is always changing, and with new technology comes a set of new challenges for industry groups, brands, and regulators.  In light of the rise of smartphones, tablets, and social media, the Federal Trade Commission (FTC) updated its online advertising disclosure guidelines.  Known as the Dot Com Disclosures, the guidance updates the original guidelines which were introduced in 2000, since, as we all know, a lot has changed since the turn of the Millennium.  While the general principles of traditional advertising law apply equally to online and mobile media, the updated guidelines provide specific guidance for making “clear and conspicuous disclosures” on mobile and social media platforms.

The FTC’s updated Dot Com Disclosures signal to marketers that traditional consumer protection laws apply to mobile marketing, regardless of space limitations.  While there is no set formula for a clear and conspicuous disclosure, when evaluating whether a disclosure meets this requirement, an advertiser should consider its placement in the ad and its proximity to the relevant claim.  Due to the smaller screen size and different format of mobile platforms, the FTC changed its definition of “proximity” from “near and, when possible, in the same screen” (from the 2000 version) to now be “as close as possible” to the relevant claim.

Mobile marketers may need to become creative if they want to continue to use hyperlinks, as hyperlinks need to be obvious and labeled to explain the nature and importance of the information to which they link – terms like “disclaimer,” “more information,” “details,” or “terms and conditions” may no longer be adequate.  The FTC also makes clear that the disclosures that are necessary to comply with the FTC Endorsement Guides need to be disclosed in space-constrained ads such as Tweets and cannot be disclaimed via a click-through or hyperlinked disclosure, but need to say something like “#Ad” in the Tweet.

The Way I See It

  • Mobile marketers should look at the FTC’s new guidance in a positive light.  For too long, we have been applying the FTC’s decade-old Dot Com Disclosures guidance to mobile media, which raised unique challenges given mobile’s space limitations.  With the flexible principles and specific examples presented in the updated guidance, mobile marketers now have the necessary tools to provide disclosures that meet FTC requirements.
  • I see the FTC making clear that if a platform does not allow marketers to make clear disclosures, that platform should not be used for advertising and this should be taken seriously in order to meet FTC standards and avoid any enforcement actions or false advertising litigation down the road.

February 1st was a big day for the Federal Trade Commission (FTC). Not only did the FTC release its report regarding mobile privacy disclosures, it also announced that it had reached a settlement with Path, a social networking app, which agreed to pay $800,000 to settle charges that it deceived users by collecting personal information from their mobile address books without their knowledge and consent, and that it collected personal information from children without their parents’ consent in violation of the Children’s Online Privacy Protection Act (COPPA).

The FTC’s report entitled “Mobile Privacy Disclosures: Building Trust Through Transparency” provides specific recommendations on improving mobile privacy disclosures for mobile platforms, app developers, advertising networks, and other third parties. Most notably, the report recommends that mobile platforms provide “just-in-time” disclosures to consumers and obtain their affirmative consent before allowing apps to access sensitive content, such as geolocation data. The report also recommends that mobile platforms consider providing “just-in-time” disclosures and obtain affirmative consent for other sensitive content, such as contacts, photos, calendar entries and audio/video content. The report further recommends that mobile platforms consider developing a one-stop “dashboard” approach to allow consumers to review the types of content accessed by the apps they have downloaded as well as icons to depict the transmission of user data. The report recommends that mobile platforms consider offering a Do Not Track (DNT) mechanism for smartphone users and makes several other recommendations aimed at providing better disclosures to consumers regarding mobile privacy.

The report also makes a number of recommendations to app developers, including that they have a privacy policy that is easily accessible through the app stores, provide “just-in-time” disclosures and obtain affirmative consent before collecting and sharing sensitive information, improve coordination and communication with ad networks and other third parties and participate in self-regulatory programs and industry organizations. In addition, the report recommends that advertising networks and other third parties communicate with app developers so that those developers can provide truthful disclosures and work with platforms to ensure effective implementation of DNT. Finally, the report suggests that app developer trade associations, academics and experts develop short-form disclosures for app developers, promote standardized app developer privacy policies and educate app developers on privacy issues.

Continue Reading FTC Announces Mobile Privacy Disclosure Guidelines

On Thursday during Advertising Week in New York City, I hosted an event called “Mission Impossible: Truth & Privacy – The Future is Now,” featuring Commissioner Julie Brill of the Federal Trade Commission, along with Frank Abagnale, one of the world’s foremost authorities on fraud and identity theft (you may know him best from the film Catch Me If You Can – he was portrayed by none other than Leonardo DiCaprio), and Jonathan Salem Baskin, Co-Author of Tell The Truth. Privacy is an issue everyone is talking about these days, and I wanted to share with you some of the thoughts and issues discussed during the session at Advertising Week. Click here to view a video of Ron’s conversation with FTC Commissioner Julie Brill.

Advertising is a fascinating and complex industry, reflecting the latest innovations, the newest technologies, and, of course, the height of creativity. Advertising is a reflection of the fundamental changes sweeping our society – the transformative effect of digital, the changes in all forms of media, the importance of data and the rise of wireless. Amidst this rapid change, privacy is one of the most important issues in the advertising and media business, and one which demands our attention now, not tomorrow.

The Way I See It

  • I see that digital technology and media has created an unprecedented “Holy Grail” opportunity for marketers to have conversations with consumers as individuals wherever they are on a broad array of devices. The question we must answer is, how do we manage the legitimate privacy concerns?
  • I see the FTC’s role and influence in steering the privacy and data security debate and action rising in importance.
  • I see global marketers and agencies working in good faith either alone or in groups to navigate safely through leading edge issues and the concerns of interested parties – the government, agencies, marketers, technology providers, media and consumers.
  • I see “do not track” continue to be a central issue that focuses many of the important advertising industry and societal issues about both what can be and what should be.
  • I see “privacy by design” being a simple concept, but a difficult concept to execute in real time.

The Way The Industry Sees It

Commissioner Julie Brill of the FTC shared some extremely valuable insights with me and the attendees of our Advertising Week session. I then asked Commissioner Brill some follow up questions that touched upon some of the conversation that we had in our Advertising Week session.

Can you highlight what you see as the role of the FTC in regards to its relationship with the advertising industry’s need to focus on consumer privacy and data security?

The Commission has developed a set of best practices, as outlined in the agency’s March 2012 final privacy framework, for companies that collect and use consumer data. (“Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers,” An FTC Report (Mar. 26, 2012) available at http://www.ftc.gov/os/2012/03/120326privacyreport.pdf.) Because the advertising industry is among the heaviest users of such information, these best practices can be useful to the advertising industry –including ad networks, individual advertisers, and all other players in the advertising eco-system—as they develop and maintain processes and systems to operationalize privacy and data security practices within their businesses. In addition to our policymaking role, the Commission takes action against companies—including those in the advertising industry—that do not treat consumer data in accordance with the laws enforced by the agency. For example, we took action against several advertising networks that misrepresented their practices involving consumers’ ability to opt-out from online behavioral advertising. (See press releases, “FTC Puts an End to Tactics of Online Advertising Company That Deceived Consumers Who Wanted to “Opt Out” from Targeted Ads” (Mar. 14, 2011), available at http://www.ftc.gov/opa/2011/03/chitika.shtm; “Online Advertiser Settles FTC Charges ScanScout Deceptively Used Flash Cookies to Track Consumers Online” (Nov. 8, 2011), available at http://www.ftc.gov/opa/2011/11/scanscout.shtm).

In the fast paced world of marketers and agencies where they must implement “privacy by design”, what is the biggest issue confronting the industry?

Well, there are a lot of big issues. One of the biggest issues is the rapid pace of today’s technological advances. Companies are bringing products and services to market as quickly as they can—and the advertising and marketing have to keep up with that pace. As a result, companies may not be employing a methodical process to consider all the privacy and data security issues that could arise with the product or service, or with an advertising or marketing campaign. I think one of the most important elements of Privacy by Design is for companies to take the time to thoroughly examine the consumer information they are collecting, what is being done with that information, and how it is being safeguarded. In our privacy report, we stress the importance of operationalizing these processes, which will help companies conduct these analyses in an efficient and timely fashion.


Continue Reading Privacy and the FTC: Inside Perspective from FTC Commissioner Julie Brill