[Federal Register Volume 64, Number 56 (Wednesday, March 24, 1999)]
[Proposed Rules]
[Pages 14156-14158]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7125]


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FEDERAL TRADE COMMISSION

16 CFR Ch. I


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.

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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., NW, 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.


[[Page 14157]]


ADDRESSES: All submissions should be sent either to the Office of the 
Secretary, Federal Trade Commission, Room 159, 600 Pennsylvania Avenue, 
NW, Washington, DC 20580, or by e-mail to <[email protected]>. 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, NW, Washington, DC 20580, 
telephone (202) 326-3030, e-mail [email protected]>.

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.
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    \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.
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    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.
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    \2\ The comments are available for viewing at the Commission's 
headquarters, 600 Pennsylvania Ave., NW, 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>.
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II. Date, Time and Location of Workshop

    The workshop is scheduled to be held in the FTC headquarters 
building, 600 Pennsylvania Avenue, NW, 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.
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    \3\ Other issues relating to electronic media generally, such as 
privacy or electronic payment technologies, will not be addressed in 
this workshop.
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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

[[Page 14158]]

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:
    (1) The party submitted a request to participate by April 12, 1999.
    (2) The party's participation would promote the representation of a 
balance of interests at the workshop.
    (3) The party's participation would promote the consideration and 
discussion of the issues presented in the workshop.
    (4) The party has expertise in issues raised in the workshop.
    (5) 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.
[FR Doc. 99-7125 Filed 3-23-99; 8:45 am]
BILLING CODE 6750-01-P