Re-Cap on FTC Workshop on Mobile and Online Advertising Privacy Disclosures

Published On June 1, 2012 | By Melissa Maalouf | General, Privacy
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On Wednesday, May 30, the FTC held a public workshop titled “In Short: Advertising & Privacy Disclosures in a Digital World,” during which the FTC gathered interested stakeholders to discuss how advertising and privacy disclosures can be more effectively implemented in social media and mobile platforms so that the FTC can update its 2000 Dot Com Disclosures Guidelines to account for these new media platforms.  The 2000 Guidelines provided businesses with guidance as to how FTC law applies to online activities with a particular focus on the clarity and conspicuousness of disclosures in online advertisements.  The FTC is seeking public comment until July 11 on the issues discussed at the workshop.  The FTC will consider the discussions from the panels as well as the written comments in issuing new Dot Com Disclosure Guidelines, which the FTC hopes to release sometime in the fall.

Overview

With regards to advertising disclosures, there was general consensus by all panelists that design and usability concerns are the most important barriers to overcome in ensuring that consumers obtain the information they need to make informed purchases through space-restricted mobile media.  There was disagreement, however, with regard to what the FTC’s role should be in addressing such concerns.  Industry representatives were generally opposed to the development of new prescriptive regulations, and advocated for greater flexibility to prioritize disclosures based on their relative importance and to account for design and usability concerns across different media platforms.  In contrast, consumer advocates and regulators stressed the importance of continuing to enforce the existing principles embodied in the Dot Com Disclosure guidance, and questioned whether certain advertising messages are appropriate for all media platforms if the design of such platforms do not allow for all necessary disclosures.

With regards to privacy, the panelists agreed that consumers rely on and expect the government and developers to tell them what information is most important to them.  Industry also stressed that it is still early in the testing and development process for self-regulatory standards such as privacy icons, streamlined and consistent privacy notices, and opt-out mechanisms and urged that any final FTC guidance not interfere with these developments.  Consumer groups and regulators stressed the continued importance of consumer education on privacy matters and the importance of focusing on some of the most intrusive privacy issues first, such as MAC address capture and tracking and third-party sharing.

Overview of Panel Discussions

The first panel, which focused on universal and cross-platform advertising disclosures, began with a discussion by Jennifer King of the U.C. Berkeley School of Information about her work on human-computer interaction.  She stressed the importance of including privacy and advertising disclosures in places where consumers are more likely to see them, in a context that makes the most sense, and in language that is more easily understandable by average consumers.

The rest of the panel focused on how advertising disclosures can most effectively be provided to consumers given the limited real estate for disclosures online and in mobile contexts.  There was much debate over the adequacy of using hyperlinks to bring users to separate disclosures.  Some panelists argued that disclosures should always be close to the claim they relate to, while others, such as Linda Goldstein of the Promotion Marketing Association, noted that hyperlinks can be useful depending on the information to be conveyed and the text of the hyperlink itself.   She also stressed that there is a need for prioritization so that the most important disclosures can be delivered closer to the message, while less important disclosures could be delivered in a different way.   All panelists generally agreed that material disclosures regarding payment terms and use of a product should not be included in website terms of service, as these documents should only contain terms relevant to site usage.  Steve DelBianco, Executive Director of NetChoice, urged the FTC to include examples in its revised Dot Com Disclosures guidance that are useful and can help industry create best practices – examples that are too nuanced or hypothetical will not be as useful.  The panelists also stressed that the right balance needs to be struck between the number of disclosures the FTC requires and the total length of necessary disclosures.

The second panel focused on advertising disclosures in social media.  The panelists addressed the use of different types of disclosures, such as “in text” disclosures (such as in the middle of a blog to inform the user that a blogger has been given something of value in exchange for a product endorsement).  Most agreed that such disclosures need to be close to the claim.  The panelists also discussed how to create effective disclosures for Twitter feeds given the limited character space.  The panelists debated whether the most effective solution is to include a hyperlink to more information with a Tweet, follow-up Tweets including the disclosure, or a uniform signal (such as “#spon” created by the Word of Mouth Marketing Association) that endorsers can include in their Tweets to signify an endorsement.  The panelists also debated whether the responsibility for disclosures is up to a social media platform or an advertiser.  Stacey Ferguson, a blogger and chief curator for Blogalicious, believed the onus should be on social media platforms to help develop disclosure solutions that work for their platforms (such as color-coding different ads to signify whether they are endorsed).   She also noted that not all ads are necessarily suited for delivery on all platforms.  Susan Cooper of Facebook countered, however, that given the growing importance of new social media technologies, the situations in which advertisers should not be able to place an ad on a certain social media platform should be limited.  Robert Weissman, President of Public Citizen, emphasized that the onus is on social media and advertisers to adapt to existing laws, not for the law to adapt to different social media platforms.  Jim Dudukovich of the Word of Mouth Marketing Association announced the Association’s intent to soon release new guidance for online disclosures.

The third panel focused on advertising disclosures on mobile devices.  All panelists generally agreed that material disclosures regarding an offer should be disclosed proximate to the term they modify.  The panelists also discussed the various solutions being developed to make advertising disclosures more mobile-friendly.  For example, Anna Bager of the Interactive Advertising Bureau promoted the concept of “responsive design” which involves creating content that automatically adapts to different formats as consumers view it through different platforms.  Paul Singer, Assistant Attorney General of the Office of the Texas AG explained that regardless of the format of the content, the most important issue is whether a disclosure is viewable in a conspicuous way through that platform.  Almost all panelists agreed that it is within a company’s interest to provide adequate and transparent disclosures so that consumers are not misled, and emphasized that such disclosures are key to brand perception.  David Schellhase of Groupon explained the importance of prioritizing disclosures so that consumers can see the disclosures most likely to influence their decision to purchase a product first.  A number of panelists praised Groupon’s easy-to-read and simple mobile disclosure approach, and Assistant AG Paul Singer noted that the Groupon approach shows that there are ways to provide adequate disclosures even within limited space.  Consumer advocates on the panel emphasized the continued importance of the original principles contained in the 2000 Dot Com Disclosures and the fact that such baseline principles should follow through to the next iteration of the document.

The fourth and final panel discussed privacy disclosures in the mobile context.  It began with Ilana Westerman of Create with Context, Inc. providing an overview of the organization’s Digital Trust Initiative, an independent effort to test various privacy mechanisms for consumer awareness and trust.    The Initiative has so far determined that consumers still do not fully appreciate or understand the ways in which their information is being used and shared, but that once they find out why their information is being collected and used, they are usually rational about the importance of certain uses to support free Internet content.  The Initiative has therefore found that the most important element of consumer trust is whether the brand provides the consumer with full information about its practices.  The Initiative has been developing and testing a privacy icon that would appear on all mobile apps that consumers could click to get more privacy information.  So far the Initiative has seen mixed success, with the biggest barriers still being consumer awareness of the icon’s function, and getting consumers to actually review and use the information available through the icon.  Lorrie Faith Cranor, a professor at Carnegie Mellon University, discussed some of her studies that show consumers still do not understand privacy icons or disclosures.  She therefore stressed the importance of consumer education as well as the development of a uniform icon.  Sara Kloek of the Association for Competitive Technology discussed mobile app developers’ efforts to create legends on mobile applications that provide information on the key privacy issues consumers care about.  Pam Dixon of the World Privacy Forum argued that the more invasive the privacy practices, the more robust and creative disclosures companies need.  For example, the panelists discussed the growing trend of companies capturing consumers’ MAC addresses from their mobile devices to track the number of times they enter a store, and Pam Dixon stressed that this type of activity requires more robust disclosure.

About The Author

Melissa Maalouf’s practice focuses on advising a broad range of clients, from start-ups to established companies, on both U.S. and international data privacy and security issues. Melissa assists clients in drafting appropriate website disclosures, implementing legally-compliant e-commerce flows, responding to FTC Section 5 and state AG enforcement actions, analyzing advertising claims, and children’s online privacy and safety issues. She also regularly helps clients obtain certification under the EU-US Safe Harbor and navigate compliance with divergent international privacy laws.

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