Consumers complain to the Federal Trade Commission (FTC) and attorney general's offices when they feel that they were misled about the terms of an online offer. When complaints are made, the agency that receives the complaints will often review the company website to determine whether the company gave "clear and conspicuous" disclosure of the material terms of the offer. If not, the agency may conclude that the company engaged in "unfair or deceptive acts or practices" in violation of consumer protection laws.
In view of the potential for penalties, it is wise to ensure that your company is making "clear and conspicuous" disclosure of all material terms to any offers on its websites. This raises the question of how do you know whether the website disclosures are "clear and conspicuous." There are no firm rules on what makes a "clear and conspicuous" disclosure. However, the FTC issued an update to guidance about online disclosure guidance. The FTC's guidance can be followed to ensure that the material terms of any online offers are "clear and conspicuous."
As noted by the FTC:
"[t]o evaluate whether a particular disclosure is clear and conspicuous, consider:
● the placement of the disclosure in the advertisement and its proximity to the claim it is qualifying;
● the prominence of the disclosure;
● whether the disclosure is unavoidable;
● the extent to which items in other parts of the advertisement might distract attention from the disclosure;
● whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure;
● whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration; and
● whether the language of the disclosure is understandable to the intended audience."
To the untrained, this guidance may seem a little murky. However, there is some logic and coherence behind it. The guidance aims to help companies ensure that the consumer clearly understands the important terms of the offer. When material terms are buried in small print or hidden in a "terms and conditions" page, it is less likely that the consumer is going to review and understand those terms. Thus, when reviewing a website to see if it has "clear and conspicuous" disclosure, one should consider the point of view of the consumer. The question is not whether the consumer can find the material terms. Rather, it is whether the consumer is likely to notice and understand the disclosure in connection with the offer or purchase. If the disclosures are ignored because they are in small print or because other elements on the website distract from the disclosure, then it is less likely that the disclosures are "clear and conspicuous."
If you need assistance in determining whether your company's website disclosures are "clear and conspicuous," please contact Harmony Law. We can help.