FR - Announcement of Date of Public Workshop

[Billing Code 6750-01P]

Federal Trade Commission

Announcement of Date of Public Workshop on the Interpretation of Rules and Guides for Electronic Media, Procedure for Requesting to Participate, and Request for Submission of Advertisements

AGENCY: Federal Trade Commission.

ACTION: Announcement of date of public workshop on the interpretation of Federal Trade Commission rules and guides for electronic media, procedures for requesting to participate, and request for submission of advertisements for use at the workshop.

SUMMARY: On May 6, 1998, the Federal Trade Commission ("Commission") published a Federal Register Notice seeking public comments on its proposal to issue a policy statement regarding the applicability of its rules and guides to electronic media, such as e-mail, CD-ROMs, and the Internet. The Commission also solicited comment regarding interest in participating in or attending a workshop to discuss the issues raised in the Federal Register Notice. As a part of the review of these issues, the Commission has scheduled the workshop for May 14, 1999 at its headquarters at 600 Pennsylvania Ave., N.W., Washington, DC. Today's Federal Register Notice discusses the topics to be discussed at the workshop and the procedures to be followed by those who wish to participate in the workshop. The Commission also solicits the submission of mock advertisements to be used at the workshop to discuss some of the issues raised in its Notice and in the comments.

DATES: Requests to participate at the workshop must be submitted by April 12, 1999, and any examples of advertisements to be used at the workshop must be submitted by April 19, 1999.

ADDRESSES: All submissions should be sent either to the Office of the Secretary, Federal Trade Commission, Room 159, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, or by e-mail to <elecmedia@ftc.gov>. The submissions should include the submitter's name, address, telephone number and, if available, FAX number and e-mail address. All submissions should be captioned "Interpretation of Rules and Guides for Electronic Media - FTC File No. P974102."

FOR FURTHER INFORMATION CONTACT: Laura J. DeMartino, Attorney, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, telephone (202) 326-3030, e-mail <ldemartino@ftc.gov>.

SUPPLEMENTARY INFORMATION:

I. Background

In a May 6, 1998 Federal Register Notice, the Federal Trade Commission ("Commission") solicited public comment on its proposal to issue a policy statement regarding the applicability of its consumer protection rules and guides to newer forms of electronic media, such as e-mail, CD-ROMs, and the Internet (hereinafter collectively referred to as "electronic media"). The Notice discussed the Commission's proposals with respect to: (1) the extent to which the Commission's rules and guides apply to representations disseminated through, and activities occurring on, electronic media; (2) how businesses may comply with the Commission's rules and guides in advertising products and services and conducting commercial activities using electronic media; (3) interpretations of certain terms in light of the use of electronic media and how electronic media could be used to comply with the affirmative disclosure requirements of the rules and guides; and (4) how disclosures required or recommended by the Commission's rules and guides should be made in electronic media advertisements.⁽¹⁾ The purpose of the Notice, and any future policy statement by the Commission, was to reduce any uncertainty regarding whether the rules and guides applied to activities on the Internet and provide guidance to industry in complying with the rules and guides in electronic media. The Commission also solicited comment regarding interest in a workshop to discuss the issues raised in the Notice.

The Commission received 62 comments in response to the Notice.⁽²⁾ A number of comments advised the Commission to proceed carefully in developing guidance for electronic media advertising, to avoid inadvertently burdening business or stifling new technology. Many comments expressed interest in participating in a public workshop to more fully discuss the issues related to the applicability of the rules and guides to electronic media. The Commission has concluded that a workshop will afford Commission staff and interested parties an opportunity to explore a number of the issues raised in the Notice and the comments. The workshop would not be intended to achieve a consensus among participants, or between participants and Commission staff, with regard to any issue raised in the Notice. The Commission will consider the views and suggestions made during the workshop, in addition to the written comments received, in formulating any future guidance regarding the application of its rules and guides to electronic media.

II. Date, Time and Location of Workshop

The workshop is scheduled to be held in the FTC headquarters building, 600 Pennsylvania Avenue, N.W., Washington, DC, on May 14, 1999.

III. Workshop Sessions

The workshop will be divided into two sessions, focusing on the issues that generated significant public comment and that the Commission believes will be useful to discuss further with participants. Session One will discuss how the Commission should evaluate whether disclosures required or recommended by the rules and guides are made clearly and conspicuously in electronic media advertisements. Session Two will discuss the interpretation of the terms "written," "writing" and "printed," as used in the rules and guides, in light of the use of electronic media. This session will also discuss how electronic media may be used to comply with requirements to provide information to consumers "in writing" or by "mail."⁽³⁾ An agenda of the workshop will be provided to all interested parties as soon as practicable.

IV. Interpretation Of The Term "Direct Mail"

The Commission has determined not to discuss at the workshop the use of the term "direct mail" in the rules and guides. The Commission proposed interpreting this term to include communications that are individually addressed and capable of being received privately (e.g., e-mail). Many written comments addressing this issue concur that e-mail is a form of direct mail, and additional workshop discussion on the issue is unlikely to contribute significantly to the record.

The comments, however, offered differing opinions and rationales as to whether targeted Internet advertising is properly considered a form of direct mail or other media advertising. The use of targeted advertising on the Internet and consumers' perceptions of it are still evolving and there is likely to be considerable variation in the extent to which such advertising is personalized to the individual consumer or viewer. Thus, the Commission has concluded it is premature, at this point, to consider defining whether or not targeted Internet advertising, in all of its varying forms, is direct mail.

V. Interpretation of "Clear and Conspicuous" Disclosures

The Notice solicited comment on how the Commission should evaluate whether disclosures required or recommended by the rules and guides are clear and conspicuous in electronic media advertisements. In determining whether a disclosure is clear and conspicuous, the Commission evaluates the nature of the advertisement and the claim and generally considers a number of factors. Because of the unique nature of electronic media advertisements, the Notice solicited comment on how these factors should be applied in evaluating such ads. The purpose of this proceeding is not to develop specific rules as to how all disclosures in electronic media advertisements should be made. Instead, this proceeding will inform the Commission's analysis of disclosures in electronic media advertisements and may provide a basis for future guidance for businesses in making online disclosures effectively.

The Notice, and the comments received in response to it, raise challenging issues regarding whether disclosures in electronic media advertisements are displayed clearly and conspicuously. Some of these issues include:

(1) the disclosure's proximity to the claim being modified and its placement in the context of the advertisement, including:

a) whether the disclosure should be placed on the same screen as the claim it modifies,

b) the difficulties faced by advertisers in placing disclosures on the same screen,

c) whether disclosures accessible by a hyperlink are effective and the nature of the hyperlink used;

(2) the disclosure's prominence;

(3) whether factors in other parts of the advertisement distract consumers' attention away from the disclosure;

(4) whether the disclosure should be repeated in a lengthy advertisement;

(5) whether the disclosure should be made in the same mode (visual, audio) as the claim; and

(6) whether a website contains features that "block" a consumer from returning to a page with a disclosure, after the consumer links to another page on the site.

VI. Request for Submission of Advertisements

To encourage a productive discussion of these issues at a workshop, Commission staff will request participants to discuss mock advertisements that staff has produced. The Commission also is providing interested parties with an opportunity to submit mock advertisements that may be useful for discussion at the workshop. The advertisements should contain disclosures that are required or advised by the rules and guides and should highlight the issues faced in evaluating whether the disclosures are clear and conspicuous. The advertisement should not feature real products or services and it should not identify the individual or company who created it. Parties interested in creating advertisements should first contact Laura DeMartino, 202/326-3030, to discuss their proposed advertisement.

If the number of advertisements submitted is so large that it would be impossible to discuss all of them at the workshop, Commission staff will choose those advertisements that best exemplify the issues to be discussed. All examples should be submitted by April 19, 1999. The advertisements should be submitted in the format in which they should be displayed at a workshop (e.g., HTML format). Prior to the workshop, Commission staff will make available the mock advertisements that will be discussed.

The Commission also encourages interested parties to submit the results of any research or studies regarding consumer behavior or perceptions of electronic media advertisements for discussion at the workshop.

VII. Request to Participate

To be eligible to participate in the workshop, you must file a request to participate by April 12, 1999. The request should specify the workshop sessions in which you are interested. Any persons who wish to participate in the workshop, but did not submit a written comment, should submit a short statement of their views. If the number of parties who request to participate in the workshop is so large that including all requesters would inhibit effective discussion among the participants, Commission staff will select as participants a limited number of parties to represent the interests. Selection will be based on the following criteria:

The party submitted a request to participate by April 12, 1999.
The party's participation would promote the representation of a balance of interests at the workshop.
The party's participation would promote the consideration and discussion of the issues presented in the workshop.
The party has expertise in issues raised in the workshop.
The party adequately reflects the view of the affected interest(s) which it purports to represent.

If it is necessary to limit the number of participants, those who requested to participate but were not selected will be afforded an opportunity, if at all possible, to present statements during a limited time period at the end of one or more sessions. The time allotted for these statements will be based on the amount of time necessary for discussion of the issues by the selected parties, and on the number of persons who wish to make statements.

Requesters will be notified as soon as possible after April 12, 1999 if they have been selected to participate.

By direction of the Commission, Commissioner Swindle not participating for medical reasons.

Donald S. Clark
Secretary

Endnotes

1. The May 6, 1998 Federal Register Notice specifies the rules and guides that are being considered in this proceeding. See 63 FR 24998 (May 6, 1998). The Commission is not addressing regulations issued by the Federal Reserve Board and enforced by the Commission: Regulation B, 12 CFR Part 202; Regulation E, 12 CFR Part 205; Regulation M, 12 CFR Part 213; Regulation Z, 12 CFR Part 226.

2. The comments are available for viewing at the Commission's headquarters, 600 Pennsylvania Ave., N.W., Room 130, Washington, DC 20580. The comments also are available on the Commission's website at <http://www.ftc.gov/bcp/rulemaking/elecmedia/index.htm>.

3. Other issues relating to electronic media generally, such as privacy or electronic payment technologies, will not be addressed in this workshop.