The FTC’s Unavoidable Clear and Conspicuous Standard

Last month, the FTC updated its Endorsements Guide. The Guide’s definition of clear and conspicuous is particularly interesting. The Guide states:

(f) For purposes of this part, “clear and conspicuous” means that a disclosure is difficult to miss ( i.e., easily noticeable) and easily understandable by ordinary consumers. * * * In any communication using an interactive electronic medium, such as social media or the internet, the disclosure should be unavoidable.

The Commission also explained that if you can avoid seeing the disclosure by not clicking on a link, the disclosure is not, well, unavoidable.

The FTC’s power to issue the Guide comes from its UDAP powers. If avoidable disclosures are UDAP violations in the endorsement context, it seems to me that any time a mandatory disclosure that is supposed to be clear and conspicuous is avoidable, it is also a UDAP violation, at least when the disclosure is made electronically.

The requirement also raises questions about what is required to be “easily understandable by ordinary consumers.” To make it more concrete, if a third of the consumers shown a disclosure don’t understand it, can the disclosure still be easily understandable by ordinary consumers? If, so, a lot of disclosures will fail, including the CFPB’s credit card disclosures, as reported here. Or is the standard independent of the number of consumers shown to misunderstand the disclosure in surveys? If so, how easily understandable to be determined? The industry must be very pleased that arbitration clauses are not required to be clear and conspicuous, because multiple studies have now shown that they are not easily understandable by ordinary consumers.

In any event, the Guides suggest that the meaning of clear and conspicuous is changing in a way that will benefit consumers. Which I think is a good thing.


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