Do I need a label on every sponsored article or ad that looks like editorial content?

Not if the ad is so clearly commercial that it is unlikely to mislead consumers. The FTC Guide's first example is a running-shoe company's ad on a financial news site. The ad's slogan and its message about shock absorption likely convey its commercial nature, and its subject matter differs substantially from the site's financial news, so a specific disclosure is probably not necessary, absent extrinsic evidence to the contrary.

Is a disclosure on the publisher's page enough?

Not if consumers can reach the ad without passing through that page. In the Guide's Fitness Life example, the article can be reached from the magazine's main page or directly, so a clear and prominent disclosure is called for on both the main page and the click-into page.

If every product claim in the sponsored piece is true, do I still need to disclose?

A truthful claim does not cure a misleading format. The FTC looks at the overall context of the ad, so what the ad says and the format it uses to convey that information are both relevant.

If I sponsor an article on a publisher's site, is that article my advertisement?

That turns on whether the article promotes the sponsor's products. The Guide's contrasting example involves a kitchen cabinet company that paid an online magazine for an article in which most of the images depict and promote the sponsor's products, and there the Guide concludes the article is an advertisement.

Do links in a content recommendation widget need to be identified as ads?

Yes, when the links are formatted like the site's news headlines and would lead consumers to think they are independent stories. In that example, the Guide says a clear and prominent disclosure is necessary before consumers click through to the advertiser's content.

If I follow the FTC's Native Advertising Guide, am I protected?

No. The Guide is informal staff guidance, and following it does not give a safe harbor. The Guide says so itself: it does not provide a safe harbor from potential liability under Section 5 of the FTC Act.

Social ProofLegal test

Native advertising

Also known as "Sponsored content" or "Paid partnership disclosure"

Berkeley Robinson, Managing Attorney at Robinson Law Firm PLLC

Author

Berkeley Robinson, Esq.

Managing Attorney, Robinson Law Firm PLLC

Berkeley has served as the go-to counsel for many scaling businesses in a transactional and litigation management capacity. Before becoming an attorney, Berkeley grew sales teams, ran online marketing campaigns, and did everything else an entrepreneur does—and still does today as the founder of two online businesses.

Definition

Native advertising is content that bears a similarity to the news, feature articles, product reviews, entertainment, and other material that surrounds it online. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017) In digital media, such ads often resemble the design, style, and functionality of the media in which they are disseminated. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)

Key legal rules

A native ad is still an advertisement, so the ordinary deception rules apply to its format as well as to its claims. These are the main rules:

An act or practice is deceptive if there is a material misrepresentation or omission of information that is likely to mislead the consumer acting reasonably in the circumstances. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
It is deceptive to mislead consumers about the commercial nature of content. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
In evaluating whether an ad is deceptive, the FTC considers the net impression the ad conveys to consumers. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
Some native ads may be so clearly commercial in nature that they are unlikely to mislead consumers even without a specific disclosure, while in other instances a disclosure may be necessary to ensure that consumers understand that the content is advertising. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
If a disclosure is necessary to prevent deception, the disclosure must be clear and prominent. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
The more a native ad is similar in format and topic to content on the publisher's site, the more likely that a disclosure will be necessary to prevent deception, and a disclosure just on the publisher's site may not be sufficient. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
Where consumers can reach the ad without first visiting the publisher's site, disclosures are needed both on the publisher's site and on the click- or tap-into page on which the complete ad appears, unless the click-into page is obviously an ad. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
Advertisers cannot use “deceptive door openers” to induce consumers to view advertising content, so they are responsible for ensuring that native ads are identifiable as advertising before consumers arrive at the main advertising page. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)

For the sake of space, this page lists only the primary rules related to this term that most businesses should follow. More may apply to your situation, and your unique facts affect how they apply.

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Why these rules exist

The duties around native advertising exist because the source of a message changes how readers treat it: knowing that something is an ad likely will affect whether consumers choose to interact with it and the weight or credibility they give the information. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015) A paid message formatted as independent content borrows credibility the reader would otherwise withhold, and a disclosure restores the reader's ability to judge. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015) That is also why accurate product claims do not solve the problem: the FTC considers misleadingly formatted ads to be deceptive regardless of whether the underlying product claims are truthful. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)

The FTC presents this as an application of old principles to new formats: it applies the same truth-in-advertising principles it has used for decades to evaluate whether the format of an ad is deceptive. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015) To help companies apply those principles day to day, the Native Advertising Guide for Businesses supplements the Enforcement Policy Statement with informal guidance from FTC staff in digital media. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015) That guidance has a limit: it does not provide a safe harbor from potential liability under Section 5 of the FTC Act. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)

Enforcement examples

In re Lord & Taylor, LLC (clothing retailer; paid article in an online fashion magazine)

Complaint, In re Lord & Taylor, LLC (FTC 2016)

Lord & Taylor's Design Lab launch, as the complaint described it, combined Lord & Taylor-branded blog posts, native advertising editorials in online fashion magazines, and a team of fashion influencers. Source: Complaint, In re Lord & Taylor, LLC (FTC 2016) Nylon Magazine ran an article about the collection in its online magazine, and the complaint alleged that Lord & Taylor reviewed and pre-approved the paid-for article, yet the article did not disclose or otherwise make clear this commercial arrangement. Source: Complaint, In re Lord & Taylor, LLC (FTC 2016) The complaint made the same allegation about a Nylon Instagram post that Lord & Taylor paid for, reviewed, and pre-approved. Source: Complaint, In re Lord & Taylor, LLC (FTC 2016)

Outcome. The complaint alleged that neither the Nylon article nor the Nylon Instagram post was an independent statement or opinion about the Design Lab collection, and that both were paid commercial advertising. Source: Complaint, In re Lord & Taylor, LLC (FTC 2016) On that basis it alleged that these acts and practices constitute unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act. Source: Complaint, In re Lord & Taylor, LLC (FTC 2016)

FTC v. Bob Robinson, LLC (work-at-home earnings opportunity)

Federal Trade Commission v. Bob Robinson, LLC: Complaint for Permanent Injunction and Other Equitable Relief (S.D. Tex. Aug. 17, 2017)

The FTC's complaint alleged that the defendants used native advertising campaigns to lure consumers into buying their work-at-home opportunities. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017) One page it described was an article on the Best Home Jobs Website titled "No Scam: Texas Mom Makes Extra $8000/Month in Her Spare Time on the Computer Without Selling Anything." Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017) The article featured a person the complaint called purportedly a "regular mom." Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017) According to the complaint, the representations set out in Paragraph 79 were false or misleading or were not substantiated at the time they were made. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017)

Outcome. The complaint charged violations of Section 5(a) of the FTC Act and of the Business Opportunity Rule. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017) To stop future violations, it asked the court to enter a permanent injunction. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017) It also asked for relief to redress consumer injury, including rescission or reformation of contracts, restitution, the refund of monies paid, and disgorgement of ill-gotten monies. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017)

In re Creaxion Corp. and In re Inside Publications, LLC (paid endorsements and advertising presented as independent content)

Creaxion Corp., In the Matter of; Inside Publications, LLC, In the Matter of (FTC)

The allegations were that Creaxion Corporation, Inside Publications, LLC, and their respective principals misrepresented that paid endorsements were independent consumer opinions and that commercial advertising was independent journalistic content. Source: Creaxion Corp., In the Matter of (FTC)

Outcome. After a public comment period, the FTC approved two final orders settling those allegations. Source: Creaxion Corp., In the Matter of (FTC)

Exposure

An FTC action in federal court can end in an injunction and money relief. In FTC v. Bob Robinson, LLC, the FTC's complaint described Section 13(b) of the FTC Act as empowering a court to grant injunctive and such other relief as the court may deem appropriate to halt and redress violations of any provision of law enforced by the FTC. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017) The same complaint added that, in the exercise of its equitable jurisdiction, the court may award ancillary relief, including rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies. Source: Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017)

The exposure can reach more than one company and the individuals behind them: in the Creaxion and Inside Publications matters, the FTC approved final orders settling allegations against both companies and their respective principals. Source: Creaxion Corp., In the Matter of (FTC) A later disclosure may not repair the problem, because the Commission has held that when the first contact between a seller and a buyer occurs through a deceptive practice, the law may be violated even if the consumer later finds out the truth. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015) Nor is this a new line of enforcement, since format cases are a long-running part of the FTC's work. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015) Native advertising risk also overlaps with endorsement liability, because an advertiser's use of third-party endorsements may be deceptive if there is an undisclosed material connection between the advertiser and the endorser that might materially affect the weight or credibility of the endorsement. Source: Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)

FAQs

1.Federal Trade Commission v. Bob Robinson, LLC: Complaint for Permanent Injunction and Other Equitable Relief - August 17, 2017. Compl., FTC v. Bob Robinson, LLC (S.D. Tex. Aug. 17, 2017)See also Native Advertising: A Guide for Businesses (Federal Trade Commission—2015). Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
2.Native Advertising: A Guide for Businesses (Federal Trade Commission—2015). Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)
3.Native Advertising: A Guide for Businesses (Federal Trade Commission—2015). Federal Trade Commission, Native Advertising: A Guide for Businesses (2015)