The Federal Trade Commission (FTC) recently issued an enforcement policy statement on deceptively formatted advertisements, which explains how it applies established consumer protection principles to different advertising formats. In conjunction with the enforcement policy statement, the FTC also released guidance for businesses applying these principles to native advertising, which refers to online marketing content that bears a similarity to the surrounding material that appears online, such as news sites, online magazines, or virtual gaming apps. The FTC's business guidance provides helpful examples to illustrate when disclosures are necessary to prevent deception in native ads and how to make clear and prominent disclosures within the format of native ads.

Some highlights and recommended practices outlined in the FTC's guidance include:

  • The more a native ad is similar in format and topic to content on the publisher's site, the more likely that a disclosure will be necessary to prevent deception.

  • Advertisers cannot use ''deceptive door openers'' to induce consumers to view advertising content. Thus, advertisers are responsible for ensuring that native ads are identifiable as advertising before consumers ''click'' to arrive at the main advertising page.

  • Because native ads allow consumers to navigate to the advertising content without first going to the publisher's site, a disclosure that appears only on the publisher's site may not be sufficient. Disclosures should appear both on the publisher's site and the click- or tap-into page on which the complete ad appears, unless the click-into page is obviously an ad.

  • Native ads should be evaluated for whether consumers are likely to understand a native ad is advertising based on the particular circumstances in which the ad is presented to consumers. Factors to consider include consumers' ordinary expectations based on their prior experience with the media in which the ad appears, as well as how they consume content in that media.

  • When consumers come upon native ads in non-paid search engine results, advertisers should take steps to ensure that the native ad does not suggest or imply to consumers that it is something other than an ad.

  • Disclosures must be clear and prominent on all devices and platforms that consumers may use to view native ads.

  • Placing disclosures near a native ad's headline increases the likelihood consumers will see them.

  • Disclosures should ''follow'' a native ad when it is republished by others in non-paid search results, social media, e-mail, or other media. URL links for posting or sharing in social media or e-mail should include a disclosure at the beginning of the native ad's URL.

Businesses should carefully assess any native ad marketing campaigns for compliance with the new FTC guidance. Members of Ballard Spahr's Consumer Financial Services Group and Privacy and Data Security Group regularly advise financial institutions on compliance with consumer financial services laws, including the FTC's Section 5 authority prohibiting unfair or deceptive acts or practices.

If you have questions, please contact Consumer Financial Services Group Practice Leader Alan S. Kaplinsky, the authors of this alert, or the Ballard Spahr attorney with whom you work.

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