FTC Introduces Internet Ad Unit

The Federal Trade Commission unveiled a new subdivision, the Internet Advertising Unit, to monitor Internet advertising practices at a daylong online advertising workshop last week at its headquarters in Washington.

The unit’s goal is to become familiar with online advertising, trends and techniques, and apply traditional advertising law principles to the Internet “in a way that both protects consumers and recognizes the unique technology and benefits of the Internet,” said Jodie Bernstein, director of the Bureau of Consumer Protection, in opening remarks to workshop participants, which included representatives from companies such as America Online and Federated Department Stores, and trade groups such as the Association of National Advertisers and the Direct Marketing Association.

Workshop topics included what constitutes “clear and conspicuous disclosure” of terms in ads. Details about the workshop as well as the sample ads is available at the FTC’s Web site, www.ftc.gov/bcp/rulemaking/emedia/workshop.

“Our goal is to provide guidance for businesses about how to apply [existing FTC law] in their online advertising and commercial transactions,” said Bernstein.

Earlier in the week, the Information Technology Association of America cautioned the FTC on its plan. With few details available on the duties of the new division, the ITAA said the unit could create a new level of bureaucracy in a bureau that has already demonstrated it has the resources and authority to address Internet-related consumer issues.

“Whatever good intentions this proposal might have, establishing a special FTC Internet bureaucracy is the wrong signal to send to foreign governments about Internet regulation,” said Harris Miller, president of the 11,000-member ITAA, Arlington, VA.

Bernstein assured participants that the FTC is simply applying existing legal principles to evolving forms of advertising, “whether it be infomercials, pay-per-call telephone, cable television or the Internet.”

Separately, the FTC announced last week that Dell Computer Corp. and Micron Electronics, Inc. agreed to settle charges that they used deceptive ads to sell computer leases on television and on the Internet.

Both Dell and Micron mislead prospects in their advertising by placing material cost information in inconspicuous or unreadable fine print or omitting the information, the FTC alleged in its complaint.

“This settlement underscores the importance of clearly disclosing essential cost information,” said Bernstein.

The proposed settlements would require Dell and Micron to “provide customers with clear, readable, and understandable information in their lease advertising,” the FTC said.

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