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Jane is a retail and small business writer with a special interest in emerging companies and entrepreneurs. She covered the financial services industry before moving into general business journalism and has written for The Age and The Australian Financial Review.

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Misleading social media ads: The old rules still apply, warns FTC

Published 14 March 2013 12:13, Updated 10 April 2013 07:32

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Misleading social media ads: The old rules still apply, warns FTC

The US Federal Trade Commission has warned advertisers that if they can’t play by the rules on social media, they shouldn’t be advertising via social platforms. Photo: AFP

Twitter might be a quick, real-time communication tool but companies must still apply the same stringent consumer protection requirements to “short form” online ads as they do to traditional advertisements, according to new guidelines set out by the US Federal Trade Commission.

Whether it’s an ad to lose 30 kilograms and look good in a new bikini or a promotion by a major soft drink manufacturer to win a new car, companies need to clearly disclose that their ads are just that: a paid advertisement and not independent or editorial comment, the FTC says.

It’s a relatively simple concept that traditional advertisers have been abiding by for years. However, until now, the rules and standards have been unclear around online advertisements and some companies have exploited the loophole.

The FTC guide, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, takes into account the rise of social media and the increased use of smartphones. The labelling of disclosures, in order to prevent an online ad from being deceptive, must be set out in black and white and not attached to an ad via a hyperlink, the guidance says. The FTC says if a disclosure cannot be made clearly in a 140-character tweet on Twitter, for example, the medium shouldn’t be used.

The news follows recent investigations into the misleading conduct of several well-known companies by the Australian Competition and Consumer Commission.

BRW reported that the competition regulator had slapped furniture retailer Super A-Mart with two fines totalling more than $13,000 for allegedly making false claims about the consumer guarantee rules in Australian consumer law.

While the FTC does not handle criminal investigations, it can issue civil penalties, ranging from several thousands of dollars to millions of dollars, depending on the severity of the breach.

.com Disclosures: How to Make Effective Disclosures in Digital Advertising has examples of misleading advertisements and how to avoid them.

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