The Federal Trade Commission issued an enforcement policy statement explaining how established consumer protection principles apply to different advertising formats, including native ads that look like surrounding non-advertising content.
In the Enforcement Policy Statement on Deceptively Formatted Advertisements, the Commission lays out the general principles it considers in determining whether any particular ad format is deceptive and violates the FTC Act. The policy statement affirms the long-standing consumer protection principle that advertisements and promotional messages that promote the benefits and attributes of goods and services should be identifiable as advertising to consumers.
"The FTC’s policy applies time-tested truth-in-advertising principles to modern media," said Jessica Rich, Director of the Bureau of Consumer Protection. "People browsing the web, using social media, or watching videos have a right to know if they’re seeing editorial content or an ad."
The policy statement explains that an ad’s format is deceptive if it materially misleads consumers about the ad’s commercial nature, including through any implied or express representation that it comes from a party other than the sponsoring advertiser. If the source of advertising content is clear, consumers can make informed decisions about whether to interact with the advertising and the weight to give the information conveyed in the ad.
The FTC also released Native Advertising: A Guide for Business to help organizations understand, and comply with, the policy statement in the context of native advertising. The business guidance gives examples of when disclosures are necessary to prevent deception and FTC staff guidance on how to make clear and prominent disclosures within the format of native ads.
The policy statement and business guidance is, in part, the result of FTC staff’s analysis of information collected at a workshop, Blurred Lines: Advertisements or Editorial?, held in December 2013 and staff’s monitoring of how native advertising is used and relevant consumer research over the past two years.
The Commission vote approving the Enforcement Policy Statement on Deceptively Formatted Advertisements was 4-0.