24996 Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules

An informal docket may also be

examined during normal business hours

in the Airspace Branch, AEA–520,

F.A.A. Eastern region, Federal Building

#111, John F. Kennedy International

Airport, Jamaica, New York 11430.

FOR FURTHER INFORMATION CONTACT: Mr.

Francis T. Jordan, Jr., Airspace

Specialist, Airspace Branch, AEA–520

F.A.A. Eastern Region, Federal Building

#111, John F. Kennedy International

Airport, Jamaica, New York 11430;

telephone: (718) 553–4521.

SUPPLEMENTARY INFORMATION:

Comments Invited

Interested parties are invited to

participate in this proposed rulemaking

by submitting such written data, views,

or arguments as they may desire.

Comments that provide the factual basis

supporting the views and suggestions

presented are particularly helpful in

developing reasoned regulatory

decisions on the proposal. Comments

are specifically invited on the overall

regulatory, economic, environmental,

and energy-related aspects of the

proposal. Communications should

identify the airspace docket number and

be submitted in triplicate to the address

listed above. Commenters wishing the

FAA to acknowledge receipt of their

comments on this notice must submit

with those comments a self-addressed,

stamped postcard on which the

following statement is made:

‘‘Comments to Airspace Docket No. 98–

AEA–02.’’ The postcard will be date/

time stamped and returned to the

commenter. All communications

received on or before the closing date

for comments will be considered before

taking action on the proposed rule. The

proposal contained in this notice may

be changed in light of comments

received. All comments submitted will

be available for examination in the

Rules Docket both before and after the

closing date for comments. A report

summarizing each substantive public

contact with the FAA personnel

concerned with this rulemaking will be

filed in the docket.

Availability of NPRMs

Any person may obtain a copy of this

Notice of Proposed Rulemaking (NPRM)

by submitting a request to the Office of

the Regional Counsel, AEA–7, F.A.A.

Eastern Region, Federal Building #111,

John F. Kennedy International Airport,

Jamaica, NY 11430. Communications

must identify the notice number of this

NPRM. Persons interested in being

placed on a mailing list for future

NPRMs should also request a copy of

Advisory Circular No. 11–2A, which

describes the application procedure.

The Proposal

The FAA is considering an

amendment to Part 71 of the Federal

Aviation Regulations (14 CFR Part 71) to

amend the Class E airspace area at

Philadelphia, PA. The ILS RWY 9R

SIAP has been amended for the

Philadelphia International Airport.

Additional controlled airspace

extending upward from 700 feet AGL is

needed to accommodate the SIAP and

for IFR operations at the airport. Class

E airspace designations for airspace

areas extending upward from 700 feet or

more above the surface are published in

Paragraph 6005 of FAA Order 7400.9E,

dated September 10, 1997, and effective

September 16, 1997, which is

incorporated by reference in 14 CFR

71.1. The Class E airspace designation

listed in this document would be

published subsequently in the Order.

The FAA has determined that this

proposed regulation only involves an

established body of technical

regulations for which frequent and

routine amendments are necessary to

keep them operationally current.

Therefore, this proposed regulation—(1)

is not a ‘‘significant regulatory action’’

under Executive Order 12866; (2) is not

a ‘‘significant rule’’ under DOT

Regulatory Policies and Procedures (44

FR 11034; February 26, 1979); and (3)

does not warrant preparation of a

regulatory evaluation as the anticipated

impact is so minimal. Since this is a

routine matter that would only affect air

traffic procedures and air navigation, it

is certified that this proposed rule

would not have significant economic

impact on a substantial number of small

entities under the criteria of the

Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference,

Navigation (air).

The Proposed Amendment

In consideration of the foregoing, the

Federal Aviation Administration

proposes to amend 14 CFR part 71 as

follows:

PART 71—[AMENDED]

1. The authority citation for part 71

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854; 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389.

§ 71.1 [Amended]

2. The incorporation by reference in

14 CFR 71.1 of Federal Aviation

Administration Order 7400.9E, dated

September 10, 1997, and effective

September 16, 1997, is proposed to be

amended as follows:

Paragraph 6005 Class E airspace areas

extending upward from 700 feet or more

above the surface of the earth.

* * * * *

AEA PA E5 Philadelphia, PA [Revised]

Philadelphia International Airport, PA

(Lat 39°52′13′′ N., long 75°14′42′′ W.)

That airspace extending upward from 700

feet above the surface within a 10-mile radius

of Philadelphia International Airport

extending clockwise from the 095° bearing

from the airport to the 225° bearing from the

airport and within a 15-mile radius of

Philadelphia International Airport extending

from the 225° bearing from the airport

clockwise to the 095° bearing from the

airport, excluding the portions that coincide

with the Berlin, NJ, Cross Keys, NJ,

Wrightstown, NJ, Toughkenamon, PA, North

Philadelphia, PA, and Wilmington, DE, Class

E airspace areas.

* * * * *

Issued in Jamaica, New York, on April 10,

1998.

Franklin D. Hatfield,

Manager, Air Traffic Division, Eastern Region.

[FR Doc. 98–12041 Filed 5–5–98; 8:45 am]

BILLING CODE 4910–13–M

FEDERAL TRADE COMMISSION

16 CFR Ch. I

Interpretation of Rules and Guides for

Electronic Media; Request for

Comment

AGENCY: Federal Trade Commission.

ACTION: Notice. Request for public

comments.

SUMMARY: The Federal Trade

Commission (‘‘Commission’’) seeks

comment on its proposal to issue a

policy statement regarding the

applicability of its 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’’). This Federal

Register Notice (hereinafter ‘‘Notice’’)

does not contain a proposed policy

statement. This Notice is intended to

provide a discussion of the issues that

would be addressed in a future policy

statement and to solicit public comment

on these issues. The Commission

believes that such a policy statement

would (1) clarify the extent to which the

Commission’s rules and guides apply to

representations disseminated through,

and activities occurring on, electronic

media; (2) provide guidance to the

public as to how to comply with the

Commission’s rules and guides in
Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules 24997

1The Internet encompasses the World Wide Web

as well as other electronic information-exchanging

features, including ‘‘Telnet,’’ ‘‘FTP’’ (File Transfer

Protocol), and USENET newsgroups. The

Commission is using the term the ‘‘Internet’’ to

encompass the Internet and proprietary online

services, such as America Online and Prodigy.

2 Some traditional forms of electronic media,

such as television and radio, have been used for

advertising and marketing purposes for years. This

Notice is not intended to affect the requirements of

the Commission’s rules and guides for television or

radio advertisements.

3 Other federal agencies, such as the U.S.

Securities and Exchange Commission, also have

considered whether new technology may be used to

comply with the laws they enforce, and have issued

interpretive guidance and rule amendments to

clarify these issues and assist industry. See, e.g., 60

FR 53458 (Oct. 13, 1995); 61 FR 24652 (May 15,

1996).

4 62 FR 11749 (Mar.12, 1997) (soliciting comment,

inter alia, on whether the 900-Number Rule’s

disclosure requirements are adequate for Internet

advertisements).

5Transcript of the Workshop on the 900-Number

Rulemaking (Day 2, June 20, 1997), Volume 2, pp.

559–579. The transcript is available in the Public

Reference Room, Room 130, of the Commission and

on the Commission’s Web site <http://

www.ftc.gov>. Some commenters stated that the

Commission’s determination regarding how clear

and conspicuous disclosures should be made in

Internet advertisements pursuant to the 900-

Number Rule would have broad implications for all

Internet advertisements. Therefore, it was argued

that all interested parties, and not simply those

persons interested in the 900-Number Rule, should

have notice of the review of this issue and the

opportunity to submit comments. Id.

6The Commission recognizes the usefulness of

maintaining a dialogue with the public regarding

these issues in order to benefit both consumers and

industry. See Commission staff report, Anticipating

the 21st Century: Consumer Protection Policy in the

New High-Tech Global Marketplace, p. 7 (May

1996) (summarizing testimony presented during

hearings regarding the need for a continuing

dialogue).

7 IntelliQuest Information Group, Inc. (Feb. 5,

1998) <http://www.intelliquest.com> (number of

users as of the fourth quarter, 1997).

8 Internet Advertising Bureau (Apr. 6, 1998)

<http://www.iab.net/news/ breaksource.html>.

9A ‘‘Web site’’ is a collection of linked electronic

‘‘pages.’’ The main ‘‘page’’ within the Web site is

often referred to as a ‘‘home page,’’ from which

links are provided to electronic pages within the

overall Web site. Frequently, the home page or

other pages within the site will provide links to

other Web sites as well. This linkage is possible

because the Web allows users to navigate or transfer

from one electronic document to another—in

actually viewing files stored on various

Continued

advertising products and services and

conducting commercial activities using

electronic media; (3) interpret certain

terms in light of the use of electronic

media and provide guidance regarding

how electronic media could be used to

comply with the affirmative disclosure

requirements of the rules and guides;

and (4) advise how disclosures required

or recommended by the Commission’s

rules and guides should be made in

advertising and other commercial

transactions in electronic media. The

Commission also solicits comment

regarding interest in participating in or

attending a workshop to discuss the

issues raised in this Notice.

DATES: Comments must be submitted on

or before July 7, 1998.

ADDRESSES: Written comments should

be submitted to: Secretary, Federal

Trade Commission, Room H–159, Sixth

Street and Pennsylvania Ave., N.W.,

Washington, D.C. 20580. The

Commission requests that the original

comment be filed with five copies, if

feasible. The Commission also requests,

if possible, that the comment be

submitted in electronic form on a

computer disk. (Programs based on DOS

or Windows are preferred. Files from

other operating systems should be

submitted in ASCII text format.) The

disk label should identify the

commenter’s name and the name and

version of the word processing program

used to create the comment.

Alternatively, the Commission will

accept comments submitted to the

following e-mail address

<ElecMedia@ftc.gov>. All submissions

should be captioned: ‘‘Interpretation of

Rules and Guides for Electronic

Media—Comment, FTC File No.

P974102.’’

FOR FURTHER INFORMATION CONTACT:

Laura J. DeMartino, Attorney, Federal

Trade Commission, Sixth Street and

Pennsylvania Ave., N.W., Washington,

D.C. 20580, telephone (202) 326–3030,

e-mail (for questions or information

only) <Ldemartino@ftc.gov> .

SUPPLEMENTARY INFORMATION:

I. Introduction

The Commission proposes issuing a

policy statement in the future regarding

the applicability of its rules and guides

to electronic media. The Commission is

using the term ‘‘electronic media’’ in

this Notice to refer to the newer forms

of electronic media, such as e-mail, CDROMs, and the Internet.1 This Notice

does not contain a proposed policy

statement. It is intended to provide a

discussion of the issues that would be

addressed in an expected policy

statement and to solicit public comment

on these issues. The purpose of the

proposed policy statement would be to

eliminate or reduce any uncertainty as

to whether the Commission’s rules and

guides apply to electronic media.2

The proposed policy statement also

would clarify how the rules and guides

apply to these new media. Many of the

Commission’s rules and guides, for

example, use terms that may be more

commonly associated with print media.

The Commission, however, believes

these terms apply to electronic media.

The proposed policy statement also

would discuss the use of electronic

media as a means of complying with

some of the requirements or

recommendations of the rules and

guides.3

The unique features of electronic

media present special challenges and

opportunities for making disclosures

effectively. The proposed policy

statement, therefore, would provide

guidance on how the Commission

would evaluate whether disclosures in

electronic media are clear and

conspicuous. The Commission believes

that such guidance will encourage

voluntary compliance by industry and

promote industry self-regulation. This

Notice discusses the Commission’s

approach to achieve these goals, which

would form the basis of a future policy

statement.

The issue of Commission guidance

and public input on electronic media

issues arose during the Commission’s

review of the Trade Regulation Rule

Pursuant to the Telephone Disclosure

and Dispute Resolution Act of 1992

(‘‘900-Number Rule’’), 16 CFR part 308.4

During a public workshop on the 900-

Number Rule, workshop participants

suggested that the Commission conduct

a separate proceeding that would

address the issue of making clear and

conspicuous disclosures on the Internet

and provide an opportunity for all

interested parties to submit comments.5

Accordingly, the Commission has

determined to publish this notice and

seek public comment from all interested

parties on the Commission’s proposed

policy statement. The Commission

believes that public comment will be

helpful because of the challenging

issues presented by electronic media

and the pace at which technological

developments are occurring.6

A. Background

1. Technological Advances

Significant technological advances in

recent years are dramatically changing

the global marketplace. With

approximately 62 million people in the

United States having access to the

Internet, it is becoming an increasingly

popular medium for advertising goods

and services and for conducting

commercial transactions.7 It is estimated

that businesses spent $906.5 million for

advertising on the Internet in 1997.8

Advertisements on the World Wide Web

(‘‘Web’’), the graphical segment of the

Internet, often contain ‘‘pages’’ which

may contain text, pictures, video,

sound, interactive graphics, or a

combination of all of these features.9
24998 Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules

computers—through the use of electronically coded

links called hypertext.

10Estimates of online sales vary dramatically.

One survey, however, estimates that as of the fourth

quarter, 1997, 37.2 million users were shopping

online and 10.5 million users were purchasing

online. IntelliQuest Information Group, Inc. (Feb. 5,

1998) <http://www.intelliquest.com>.

11The Commission examined consumer

protection issues raised by technological

developments during hearings in November 1995.

The Commission staff report on the hearings

describes the technological developments, the

challenges faced by law enforcement agencies to

address consumer protection issues without stifling

the use of new technology, and various proposed

strategies for resolving consumer protection

concerns. Commission staff report, Anticipating the

21st Century: Consumer Protection Policy in the

New High-Tech Global Marketplace (May 1996).

12A Framework for Global Electronic Commerce,

p. 17 (July 1, 1997) <http://www.whitehouse.gov/

WH/New/Commerce>. ‘‘Truthful and accurate

advertising shall be the cornerstone of advertising

on all media, including the Internet.’’ Id. at 16.

13See Commission staff report, Anticipating the

21st Century: Consumer Protection Policy in the

New High-Tech Global Marketplace, pp. 27, 30–31

(May 1996). The Commission already has brought

a number of cases against companies engaged in

unfair or deceptive practices on the Internet. See,

e.g., Global World Media Corp., Docket No. C–3772

(Oct. 17, 1997) (alleged false claims about an herbal

supplement in advertising on the Internet and other

media); FTC v. Audiotex Connection, Inc., CV–97–

0726 (E.D.N.Y. filed Feb. 13, 1997) (Internet Web

site program allegedly disconnected consumer’s

access provider without consent or adequate

disclosure and re-connected computer to an

international access provider that billed consumers

over $2 per minute); FTC v. Fortuna Alliance,

L.L.C., Civ. No. C96–799M (W.D. Wash. filed May

23, 1996) (alleged illegal pyramid investment

scheme marketed on the Internet); FTC v. Brandzel,

96C 1440 (N.D. Ill. filed Mar. 13, 1996) (computer

memory chips advertised on the Internet allegedly

were paid for but not delivered in violation of

section 5 of the FTC Act and the Mail or Telephone

Order Merchandise Rule, 16 CFR part 435).

14Federal Trade Commission Policy Statement on

Deception, appended to Cliffdale Associates, Inc.,

103 F.T.C. 110, 174 (1984) (hereinafter ‘‘Deception

Statement’’); Federal Trade Commission Policy

Statement on Unfairness appended to International

Harvester Co., 104 F.T.C. 949 1070 (1984)

(superseded by 15 U.S.C. 45(n)); Federal Trade

Commission Policy Statement Regarding

Advertising Substantiation, 48 FR 10471 (Mar. 11,

1983).

15 15 U.S.C. 57a(a)(1)(B). The Commission is

empowered to promulgate rules which define with

specificity unfair or deceptive acts or practices

when it has reason to believe that certain unfair or

deceptive acts or practices are prevalent. Id.

16 15 U.S.C. 45(m)(1)(A). The Commission also

may seek redress for consumers. 15 U.S.C. 57b(a)(1).

17For example, the Energy Policy and

Conservation Act, 42 U.S.C. 6201, et seq., as

amended, requires the Commission to prescribe

rules for energy consumption and efficiency

labeling of certain appliances. See Rule Concerning

Disclosures Regarding Energy Consumption and

Water Use of Certain Home Appliances and Other

Products Required Under the Energy Policy and

Conservation Act (‘‘Appliance Labeling Rule’’), 16

CFR part 305.

18 16 CFR 1.5. Section 18(a)(1)(A) of the FTC Act

authorizes the Commission to issue ‘‘interpretative

rules and general statements of policy with respect

to unfair or deceptive acts or practices in or

affecting commerce.’’ 15 U.S.C. 57a(a)(1)(A).

19 16 CFR 1.5.

20The Commission is not addressing antitrust

issues or the Guides for Advertising Allowances

and Other Merchandising Payments and Services,

16 CFR part 240, in this Notice. Further, this Notice

does not address the Commission’s rules of

practice, 16 CFR parts 1–4. Other issues relating to

the use of electronic media generally, such as

privacy and electronic payment technologies, are

being examined in different proceedings. See 62 FR

10271 (Mar. 6, 1997) (regarding previous

Commission workshops on consumer information

privacy issues and children’s online privacy); 62 FR

19173 (Apr. 18, 1997) and 62 FR 29392 (May 30,

1997) (discussing public meetings held by the interagency Consumer Electronic Payments Task Force

on consumer issues raised by emerging electronic

money and payment technology).

21Rule and Regulations Under the Hobby

Protection Act (16 CFR part 304); Regulations under

the Comprehensive Smokeless Tobacco Health

Education Act of 1986 (16 CFR part 307); Test

Procedures and Labeling Standards for Recycled Oil

(16 CFR part 311); Unfair or Deceptive Advertising

and Labeling of Cigarettes in Relation to the Health

Hazards of Smoking (16 CFR part 408); Care

Labeling of Textile Wearing Apparel and Certain

Piece Goods (16 CFR part 423); Rule Concerning

Cooling-Off Period for Sales Made at Homes or at

Certain Other Locations (16 CFR part 429); Funeral

Industry Practices Rule (16 CFR part 453);

Ophthalmic Practice Rules (16 CFR part 456); Rules,

Regulations, Statements of General Policy or

Interpretation and Exemptions Under the Fair

Packaging and Labeling Act (16 CFR parts 500–503);

and Procedures for State Application for Exemption

from the Provisions of the Fair Debt Collection

Practices Act (16 CFR part 901).

Consumers are able to purchase goods

or services directly over the Internet.10

Businesses also use CD-ROMs to

disseminate information about their

products to consumers. In addition,

businesses use e-mail and facsimiles to

communicate directly with consumers.

2. The Commission’s Role in the New

Marketplace

The Commission believes that the use

of this new technology should be

encouraged. The Internet provides

consumers and businesses with access

to a global marketplace. Consumers

have instant access to a large amount of

information and a greater array of

products and services. These newer

forms of electronic media also provide

businesses with different ways of

advertising, selling goods, and

communicating with customers. At the

same time, the use of this new

technology for commercial activities

raises consumer protection concerns.11

The Commission agrees with the

statement by the Interagency Working

Group on Electronic Commerce, that

‘‘[i]n order to realize the commercial

and cultural potential of the Internet,

consumers must have confidence that

the goods and services offered are fairly

represented, that they will get what they

pay for, and that recourse or redress is

available if they do not.’’12 As a result,

the Commission believes that

enforcement of consumer protection

laws is necessary to ensure the vitality

and viability of the Internet as a new

marketplace.13

3. Legal Authority

This Notice addresses the

applicability of certain rules and guides

issued pursuant to section 5 of the

Federal Trade Commission Act (‘‘FTC

Act’’), 15 U.S.C. 45(a), and other statutes

enforced by the Commission to

electronic media. Section 5 of the FTC

Act gives the Commission broad

authority over the advertising and

marketing of products and services

through its prohibition on ‘‘unfair or

deceptive acts or practices in or

affecting commerce.’’ The Commission

has issued policy statements to provide

guidance on how it evaluates whether

acts or practices are ‘‘unfair or

deceptive’’ under section 5 of the FTC

Act and on how it will enforce the legal

requirement that advertisers possess a

reasonable basis for objective claims

about their products and services.14

The Commission rules addressed in

this Notice prohibit specific unfair or

deceptive acts or practices and ‘‘may

include requirements prescribed for the

purpose of preventing such acts or

practices.’’ 15 The Commission may

initiate civil actions, seeking civil

penalties, against any person who

violates a rule ‘‘with actual knowledge

or knowledge fairly implied on the basis

of objective circumstances that such act

is unfair or deceptive and is prohibited

by such rule.’’ 16 The Commission also

promulgates rules pursuant to specific

Acts of Congress.17 The remedies

available to enforce these rules vary.

The Commission’s guides are

‘‘administrative interpretations of the

laws administered by the Commission’’

and are intended to assist the public in

voluntarily complying with the law

(e.g., by providing guidance on how to

avoid unfair or deceptive acts or

practices).18 Although guides do not

have the force and effect of law, failure

to comply with them may result in

corrective action under applicable

statutory provisions (e.g., a proceeding

pursuant to section 5(a) of the FTC

Act).19

B. Scope of the Proposed Policy

Statement

The proposed policy statement would

address those rules and guides issued by

the Commission that solely pertain to

consumer protection issues.20 These

rules and guides are listed in the

Appendix. Other consumer protection

rules and guides will not be addressed

in this proceeding.21 These rules and

guides either may not apply to

electronic media or contain provisions

that preclude uniform treatment in a
Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules 24999

22Regulation B, 12 CFR part 202; Regulation E, 12

CFR part 205; Regulation M, 12 CFR part 213;

Regulation Z, 12 CFR part 226. The Federal Reserve

Board has issued an interim rule amending

Regulation E and proposed rules amending

Regulations B, E, M and Z regarding the use of

electronic disclosures for matters covered by those

Regulations. 63 FR 14528, 14538, 14548, 14552,

14555 (Mar. 25, 1998).

23 In 1992, the Commission implemented a

regulatory reform program to assess, at least once

every ten years, the continued need and usefulness

of its rules and guides and revise or, as necessary,

rescind outdated rules and guides. See 63 FR 1802

(Jan. 12, 1998). To date under this program, the

Commission has reviewed 19 guides of which it has

repealed 15, and 28 rules of which it has repealed

13. Many of the retained rules and guides have been

amended to reduce compliance burdens while still

achieving their intended purpose.

24See 900-Number Rule, 16 CFR part 308, 62 FR

11749 (Mar. 12, 1997); Rule Regarding the Use of

Negative Option Plans by Sellers in Commerce, 16

CFR part 425, 62 FR 15135 (Mar. 31, 1997); Rule

Regarding Disclosure Requirements and

Prohibitions Concerning Franchising and Business

Opportunity Ventures, 16 CFR part 436, 62 FR 9115

(Feb. 28, 1997).

25See 15 U.S.C. 44, 45(a)(2); Section 2 of the

McCarran-Ferguson Act, 15 U.S.C. 1012(b)

26See, e.g., Guides for the Use of Environmental

Marketing Claims, 16 CFR part 260 (addressing

environmental claims made about products and

services).

27See, e.g., Rule Concerning the Preservation of

Consumers’ Claims and Defenses, 16 CFR part 433

(requiring that consumer credit contracts contain

certain provisions).

policy statement and need to be

examined separately. The Commission

also is not addressing regulations issued

by the Federal Reserve Board and

enforced by the Commission.22

In addition, the Commission is

currently reviewing certain rules and

guides as a part of its ongoing regulatory

review process.23 In some of these

reviews, the Commission is examining,

among other things, the effect of new

technology on the provisions of those

rules and guides.24 Comments regarding

specific amendments to those rules and

guides in light of new technology

should be submitted in the course of

those particular reviews. To the extent

that the broad policy issues addressed

in this Notice impact on those rules or

guides, however, interested persons also

should submit comments in this

proceeding. For example, if a rule or

guide under review requires or

recommends that disclosures be clear

and conspicuous (which will be

addressed in the context of electronic

media in this proposal), commenters

should provide a submission in this

proceeding even if they have already

commented in the other review.

This Notice and the proposed policy

statement also are not intended to

address all of the substantive issues

specific to certain rules or guides that

may arise because of the use of

electronic media. For example, this

Notice addresses the applicability of the

Guides Concerning Use of

Endorsements and Testimonials in

Advertising (‘‘Endorsement Guides’’), 16

CFR part 255, to electronic media and

proposes factors the Commission would

use to evaluate the effectiveness of

disclosures that accompany

endorsements in electronic media.

Developments in electronic media,

however, may raise new issues unique

to the Endorsement Guides regarding

what is—or is not—an ‘‘endorsement.’’

The Commission will address issues

that are unique to a particular rule or

guide on a case-by-case basis or during

the regular review of the rule or guide.

The Commission does not consider

the issuance of this proposal, or any

future policy statement that may result

from this proceeding, to constitute

either a new rule or a substantive

amendment of its current rules. The

policy statement would not create any

new rights, duties, obligations, or

defenses, but instead would clarify the

rights, duties, obligations, or defenses

that currently exist pursuant to the rules

and guides. Further, the Commission

would retain its discretion for

determining how to proceed in

particular cases. The Commission will

follow the rulemaking procedures

required to substantively amend a rule,

if such amendments are necessary to

extend a particular rule’s coverage to

electronic media. Additionally, this

proposal or any future policy statement

will not affect the Commission’s

jurisdiction.25

C. Public Workshop

To assist in developing its proposed

enforcement policy statement, the

Commission is soliciting comment from

all interested parties regarding the

issues raised in this Notice. The

Commission also seeks comment as to

the advisability of convening a public

workshop to discuss the issues raised in

this Notice. A workshop would afford

Commission staff and interested parties

a further opportunity to discuss issues

related to the applicability of the

Commission’s rules and guides to

electronic media. 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 this Notice.

Persons interested in attending or

participating in such a workshop are

requested to notify Commission staff in

the comment submitted in response to

this proposal. If the Commission

decides to convene a public workshop,

it will announce the date, time and

location of the workshop in a separate

Notice in the Federal Register.

II. Proposals for an Enforcement Policy

Statement

A. The Applicability of Rules and

Guides to New Forms of Electronic

Media

One objective of the proposed policy

statement would be to reduce any

uncertainty regarding whether specific

Commission rules and guides apply to

electronic media. The Commission’s

rules and guides generally address

representations made about certain

products or services 26 and other

commercial activities.27 The proposed

policy statement would clarify that (1)

rules and guides that apply to

representations generally without

reference to, or limitation on, the

medium used to disseminate them

apply equally to representations

disseminated through electronic media;

and (2) rules and guides that specify

how or where representations are

disseminated are broad enough to apply

to representations disseminated through

electronic media.

1. Rules and Guides That Apply to

Representations Generally

Many rules and guides are not limited

to any media or mode of dissemination.

Rather, they apply generally to

representations or any form of

advertising.

Example 1: The Guides for the

Jewelry, Precious Metals, and Pewter

Industries (‘‘Jewelry Guides’’), 16 CFR

23.0(c), apply to ‘‘claims and

representations about industry products

included in labeling, advertising,

promotional materials, and all other

forms of marketing * * *.’’

Example 2: The Guides for Select

Leather and Imitation Leather Products

(‘‘Leather Guides’’), 16 CFR 24.2(g), state

that disclosures should be made ‘‘in all

advertising of such products

irrespective of the media used.’’

Example 3: The Rule Concerning

Deceptive Advertising as to Sizes of

Viewable Pictures Shown by Television

Receiving Sets (‘‘TV Picture Size Rule’’),

16 CFR 410.1, addresses ‘‘designations’’

used to refer to television picture sizes

without specifying how or where the

designation is made (e.g., orally, in

television advertisements, in print

advertisements, etc.).

For this category, the plain language

of each rule and guide applies to
25000 Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules

28The Mail and Telephone Order Merchandise

Rule (‘‘Mail Order Rule’’), 16 CFR part 435, applies

to orders for merchandise made using certain

media, such as the telephone. The Mail Order Rule

defines the term ‘‘telephone’’ broadly, so that the

Rule covers orders placed by facsimile or by

computer through telephone modems. 16 CFR

435.2(b). Thus, this Rule expressly encompasses

electronic media because information is transmitted

over the telephone infrastructure. Another

provision of the Mail Order Rule states that mail or

telephone order sales occur regardless of ‘‘the

method used to solicit the order.’’ 16 CFR 435.2(a).

Thus, the Rule covers any means of soliciting

orders, including those solicitations via electronic

media.

29 During the promulgation of the Telemarketing

Sales Rule, the Commission stated that it did not

have sufficient information to justify coverage of

online services under the Rule’s requirements, and

thus, this Rule does not apply to transactions

conducted entirely on the Internet. 60 FR 30406,

30411 (June 8, 1995). Any modification to this

general coverage will be handled separately, if

needed.

30The Rule also requires labels to be placed on

fuel dispensers and on alternative fueled vehicles.

Since these requirements do not raise concerns

regarding the use of electronic media, they are not

addressed in this Notice.

31The rules and guides discussed in this section

are used as examples and not as an exhaustive list

of the rules and guides that use the described terms.

32This provision simply restates section 323(c) of

the Energy Policy and Conservation Act, 42 U.S.C.

6201, which states that such representations are

considered unfair or deceptive acts or practices in

violation of the FTC Act.

33Traditional mail includes mail delivered by the

United States Postal Service as well as by private

mail carriers.

34The Rule always applies to consumer

telephone calls in response to direct mail

solicitations for certain types of products and

services, regardless of the disclosures made in the

solicitation. See 16 CFR part 310 for the full text

of the Rule.

representations and claims in any

medium, including electronic media.

The policy statement would merely

clarify that when a rule or guide does

not limit how covered representations

are communicated to consumers, how

advertising is disseminated, or where

commercial activities occur, the

provisions of the rule or guide apply to

such activities in electronic media.28

2. Rules and Guides Referencing

Specific Modes of Communication

Some rules and guides specify where

or how representations or other

information are disseminated, e.g.,

referring to ‘‘written’’ advertisements or

‘‘direct mail promotional materials,’’ or

specifying that information needs to be

provided to others ‘‘in writing.’’

Example 1: The disclosure obligations

of the Telemarketing Sales Rule, 16 CFR

part 310, are triggered when consumers

call telemarketers in response to direct

mail solicitations (unless certain

disclosures appear in the direct mail

solicitation).29 The term ‘‘direct mail

solicitations’’ is not defined in the Rule.

(See, discussion at II. B. 2.)

Example 2: The Rule Concerning

Labeling Requirements for Alternative

Fuels and Alternative Fueled Vehicles

(‘‘Alternative Fuels Rule’’), 16 CFR

309.11, 309.13, requires industry

members to certify the fuel rating of

certain alternative fuels when they

transfer fuel to anyone who is not a

consumer.30 The Rule states that

certifications may be made by delivery

ticket, or by a letter or ‘‘written

statement.’’

As discussed in greater detail below,

the Commission believes that these

illustrated specifications include the use

of electronic media and that such

inclusion is consistent with the

intention of rules and guides containing

such specifications. Moreover, in certain

instances, it may be beneficial for firms

to use electronic media to comply with

the requirements of the rules and

guides. Thus, it is proposed that the

policy statement would clarify that

those rules and guides apply equally to

electronic media.

B. Interpretation of Terms Used in Rules

and Guides

The Commission’s rules and guides

use certain terms that may be more

commonly used in a paper-based

context. With the increasing use of

computers, the meaning of such terms

already has evolved to take into account

new technologies. The proposed policy

statement would clarify that the

Commission interprets these terms in

light of the use of new technologies so

that industry members understand their

obligations under the Commission’s

rules and guides.

1. The Terms ‘‘Writing,’’ ‘‘Written’’ and

‘‘Printed’’

Many of the Commission’s rules and

guides use the terms ‘‘writing,’’

‘‘written,’’ or ‘‘printed’’ with reference

to certain documents.31 For example,

the Appliance Labeling Rule, 16 CFR

305.4(d), states that it is unfair or

deceptive to make any representation

‘‘in writing (including a representation

on a label) or in any broadcast

advertisement,’’ with respect to energy

use or efficiency of certain products,

unless the product has been tested in

accordance with the Rule.32 Neither the

Rule nor the enabling statute, the Energy

Policy and Conservation Act, defines

the term ‘‘in writing.’’ The Appliance

Labeling Rule also requires that certain

disclosures be made in catalogs, which

are defined as ‘‘printed material which

contains the terms of sale, retail price,

and instructions for ordering, from

which a retail consumer can order a

covered product.’’ 16 CFR 305.2(m),

305.14. The Rule does not define the

term ‘‘printed.’’

With the use of new technology, the

terms ‘‘writing,’’ ‘‘written,’’ and

‘‘printed’’ are not merely associated

with communications on paper. The

proposed policy statement would clarify

that, when used in the Commission’s

rules and guides, the terms ‘‘written,’’

‘‘writing,’’ and ‘‘printed’’ refer to

information that is capable of being

preserved in a tangible form and read,

as opposed to an oral statement that is

intangible and transitory. As with

information presented on paper,

consumers using electronic media can

read the information and preserve it for

possible later review either by printing

it on paper, saving it on disk, or by some

other means.

Using this interpretation, the

Appliance Labeling Rule’s

substantiation requirements for energy

efficiency representations made ‘‘in

writing * * * or in any broadcast

advertisement’’ would apply to

representations in electronic media that

are capable of being preserved and read,

such as representations on CD–ROMs or

on the Internet. Further, the

Commission would interpret the Rule’s

definition of catalog (‘‘printed

material’’) to include any material that

is capable of being preserved in tangible

form and read, and that also meets the

remainder of the Rule’s definition (e.g.,

from which a retail consumer can order

a covered product).

The Commission solicits comment on

its proposed interpretation of the terms

‘‘written,’’ ‘‘writing,’’ and ‘‘printed’’ that

apply to the use of electronic media.

The Commission seeks information on

whether the interpretation adequately

reflects the understanding of the terms

and the underlying purpose of the rules

and guides that use them, and accounts

for technological developments.

2. The Term ‘‘Direct Mail’’

The understanding of other terms also

has evolved with the advent of new

technology. The concept of ‘‘mail,’’ for

example, is understood to encompass

electronic mail through the Internet as

well as traditional mail delivery.33 Some

of the Commission’s rules and guides

refer to ‘‘direct mail,’’ in the context of

direct mail solicitations. For example,

the Telemarketing Sales Rule, 16 CFR

310.6(e), applies to telephone calls

initiated by consumers in response to

‘‘direct mail solicitations,’’ unless

specified information is disclosed in the

solicitation.34

Where the Commission’s rules or

guides refer to ‘‘direct mail,’’ the
Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules 25001

35Messages posted on Internet bulletin boards,

however, may be considered to be advertising for

the purposes of the Telemarketing Sales Rule, 16

CFR 310.6(e), and other rules and guides.

36As mentioned above, the Alternative Fuels

Rule, 16 CFR part 309, contains a similar

requirement.

37Even if electronic media is used to provide

certain ‘‘written’’ information, the Rule’s recordkeeping requirements would continue to apply.

38This interpretation is consistent with the

Guides’ definition of the term ‘‘advertising’’ as

including ‘‘any form of public notice however

disseminated or utilized.’’ 16 CFR 238, n. 1.

39The Commission discusses the Internet

specifically in this section because the examples are

most pertinent to disclosures on Web sites. The

guidance proposed by the Commission below,

however, also may be applicable to disclosures in

other electronic media.

proposed policy statement would state

that the term refers to private

communications, i.e., traditional mail as

well as electronic communications that

are individually addressed and capable

of being received privately. This

interpretation would clarify that direct

mail includes those communications

that are directed to particular

individuals, such as facsimiles or email, but not directed to the public at

large, as are Internet bulletin boards.35

E-mail, for example, requires that the

sender address the message to

individual recipients’ e-mail addresses

(which is true even if the sender

addresses a single e-mail to multiple

individuals at their personal e-mail

addresses) and is capable of being

received privately by the recipients.

Therefore, telemarketers or sellers who

send individually addressed e-mail that

provides a telephone number for

consumers to call may be subject to the

provisions of the Telemarketing Sales

Rule, 16 CFR part 310.

The Commission solicits comment

regarding whether its proposed

interpretation of the term ‘‘direct mail’’

adequately reflects the understanding of

the term and appropriately encompasses

the electronic equivalents of ‘‘direct

mail.’’ The Commission also solicits

comment on whether targeted

advertising on the Internet should be

considered as the electronic equivalent

of ‘‘direct mail.’’ For example, some

Internet advertisers track users’ interests

through their click patterns or use of

search terms. These advertisers may

then target advertisements to a

particular user. Although this

advertising appears on a Web site,

which generally may be considered to

be a public forum, the targeted

advertisement is addressed to a

particular user’s computer and is

capable of being received privately by

that user.

3. Use of Electronic Media To Comply

With Affirmative Requirements

Some rules and guides require or

recommend that businesses provide

information in writing to another

person. The Commission recognizes that

it may be easier, more efficient and less

costly for industry members to comply

with various requirements by using

electronic media. This is consistent with

the Commission’s intention that its rules

and guides should not discourage the

use of electronic media.

The Automotive Fuel Ratings,

Certification and Posting Rule, 16 CFR

306.6, for example, requires that

industry members certify the fuel’s

octane rating when they transfer fuel to

anyone who is not a consumer.36 The

Rule permits industry members to do

this in two ways: Members may include

with each transfer, a delivery ticket or

other paper such as an invoice or ‘‘any

other written proof of transfer,’’ or they

may ‘‘(g)ive the person a letter or other

written statement’’ that contains certain

information. 16 CFR 306.6(a) and (b).

With the Commission’s interpretation of

the term ‘‘written,’’ described above, the

transferor could deliver information in a

form that is capable of being preserved

in a tangible form and read. Thus, the

transferor could use electronic media,

such as e-mail or facsimile, to give the

person ‘‘a letter or other written

statement.’’ 37

The requirement that certain

information should be provided to

another person implies that such

information actually be received by that

person. Therefore, although it may be

advantageous to use new technology to

comply with affirmative requirements,

industry members should be mindful of

certain issues. For example, the

requirement to give, mail, deliver or

furnish information would not be met if

the intended recipient does not have the

technological capabilities of receiving or

viewing the information. In certain

circumstances, industry members may

need to obtain the recipient’s consent to

deliver information by a certain

electronic method, inform the recipient

of any particular media applications

needed to view the information, or

deliver the information on paper.

Because there may be technological

difficulties that could impede the

electronic delivery of information, it

may be necessary for industry members

to confirm that the recipient in fact

received the information. Most facsimile

machines routinely confirm when the

facsimile has been successfully

transmitted. Senders, for example,

might require recipients to confirm

receipt by return e-mail or verify in

some manner the recipients’ access to

information posted on a Web site. The

Commission seeks comment on what, if

any, guidance is necessary regarding the

use of electronic media to comply with

affirmative disclosure requirements.

4. Other Terms

Where other terms are reasonably

susceptible of being interpreted as

applying to, or occurring within the

realm of, electronic media, the proposed

policy statement would clarify that the

terms are to be read broadly and

inclusively so as to apply to electronic

media. The Guides Against Bait

Advertising (‘‘Bait Advertising

Guides’’), 16 CFR 238.1, for example,

advise that advertisements containing

an offer to sell a product should not be

published unless the offer is a bona fide

effort to sell the advertised product. The

Commission interprets the term

‘‘publish’’ to include information that is

made available to the public in online

catalogs or other Web pages.38 The

Commission solicits comment on this

general proposal and whether there are

additional terms that should be

specifically addressed by the

Commission in a policy statement.

C. Clear and Conspicuous Disclosures in

Electronic Media

The application of the Commission’s

rules and guides to electronic media

advertising presents new issues

regarding the evaluation of

disclosures.39 Many rules and guides

contain disclosure requirements

mandating or advising that disclosures

be ‘‘clear and conspicuous.’’ Numerous

Commission precedents offer guidance

on the meaning of the clear and

conspicuous standard in traditional

advertising media. Electronic media

advertisements, however, incorporate

both traditional and unique features that

raise new issues in evaluating the

effectiveness of disclosures. In

proposing guidance in this area, the

Commission is attempting to provide

consumers with comprehensible

disclosures to prevent deception, while

not imposing undue burdens or

restrictions on businesses in complying

with the disclosure requirements.

1. Disclosures Required or Advised by

Rules and Guides

The rules and guides that contain

disclosure requirements generally

require or recommend that material

information be disclosed to consumers

to prevent deception, to ensure that

consumers receive complete

information regarding the terms of a

transaction, or to further public policy

goals. For example, the Endorsement

Guides, 16 CFR 255.2, protect against
25002 Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules

40The following are examples of other

articulations found in the Commission’s rules and

guides: ‘‘clearly, adequately, and conspicuously,’’

‘‘clearly, conspicuously, and non-deceptively,’’

‘‘adequate and non-deceptive’’ (Guides for the

Nursery Industry (‘‘Nursery Guides’’), 16 CFR

18.8(b)); ‘‘sufficiently clear and prominent’’

(Jewelry Guides, 16 CFR 23.1 n.2); ‘‘of such

conspicuousness and clarity’’ (Leather Guides, 16

CFR 24.2(g), and Guides for the Watch Industry, 16

CFR 245.3(o)); ‘‘clearly and adequately’’ (Tire

Advertising and Labeling Guides (‘‘Tire Guides’’),

16 CFR 228.14(b)(3); Bait Advertising Guides, 16

CFR 238.3(c); Retail Food Store Advertising and

Marketing Practices Rule, 16 CFR 424.1); ‘‘of

sufficient clarity and conspicuousness’’ (Guides for

the Decorative Wall Paneling Industry (‘‘Wall

Paneling Guides’’), 16 CFR 243.1(c)(4)); ‘‘legible and

conspicuous’’ (Rules and Regulations Under Fur

Products Labeling Act, 16 CFR 301.38(a)(1)); and

‘‘conspicuous’’ (Tire Guides, 16 CFR 228.11).

41This approach is set out in the Commission’s

general policy on deception. ‘‘[T]he Commission

will find deception if there is a representation,

omission or practice that is likely to mislead the

consumer acting reasonably in the circumstances to

the consumer’s detriment.’’ Deception Statement,

103 F.T.C. at 176. In evaluating an advertisement

or other promotional message, the Commission

focuses not on the individual elements of the

message in isolation, but on its ‘‘overall’’ or ‘‘net’’

impression. Id. at 175, n. 4. See also American

Home Products, 98 F.T.C. 136, 374 (1981), aff’d 695

F.2d 681 (3d Cir. 1982).

42 Deception Statement, 103 F.T.C. at 180–181,

‘‘Qualifying disclosures must be legible and

understandable. In evaluating such disclosures, the

Commission recognizes that in many

circumstances, reasonable consumers do not read

the entirety of an ad or are directed away from the

importance of the qualifying phrase by the acts or

statements of the seller.’’

43E.g., Kraft, Inc., 114 F.T.C. 40, 124 (1991), aff’d,

970 F.2d 311 (7th Cir. 1992), cert. denied, 507 U.S.

909 (1993); Thompson Medical Co., 104 F.T.C. 648,

797–98 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986),

cert. denied, 479 U.S. 1086 (1987); See also

Commission consent orders in European Body

Concepts, Inc., Docket No. C–3590 (June 23, 1995);

Eggland’s Best, Inc., Docket No. C–3520 (Aug. 15,

1994).

44Certain rules and guides expressly include

factors that are analyzed in determining the

adequacy of a disclosure. For example, the Used

Auto Parts Guides require that disclosures be ‘‘of

such size or color contrast and so placed as to be

readily noticeable.’’ 16 CFR 20.1(b)(2). Such

specific articulations are consistent with the general

‘‘clear and conspicuous’’ standard and would

continue to inform the analysis of whether the

disclosure is effectively communicated.

45For example, some e-mail messages or

facsimiles may contain only text, while Web pages

or CD–ROMs may contain text, graphics, video and

audio.

deception by advising that advertisers

disclose what performance consumers

can generally expect with a product

when an endorsement is not

representative of that performance. In

addition, the Guides for the Advertising

of Warranties and Guarantees

(‘‘Warranty Guides’’), 16 CFR 239.2(a),

provide for complete disclosure of

warranty information by advising that if

an advertisement mentions a product

warranty, a disclosure should be made

that consumers may review the

complete details of the warranty prior to

purchase at the place where the product

is sold. The required energy efficiency

disclosures in the Appliance Labeling

Rule, 16 CFR 305.4, further the statutory

policy goal of promoting energy

conservation.

Some disclosures are required when a

certain term, representation or claim

(i.e., a ‘‘triggering representation’’) is

made. The Leather Guides, 16 CFR 24.2,

for example, advise that the term

‘‘leather’’ (the triggering term) be

qualified when used to describe a

product that is not composed in all

substantial parts of leather. Other

disclosure requirements may not be

linked to a specific triggering term, but

nonetheless are necessary to prevent

deception, e.g., the Guides for the

Rebuilt, Reconditioned and Other Used

Automobile Parts Industry (‘‘Used Auto

Parts Guides’’) 16 CFR 20.1(b), advise

that it is unfair or deceptive to offer for

sale or sell used auto parts unless the

fact that the parts are used is disclosed

in advertising and on invoices. In other

cases, rules and guides advise that

information be disclosed to consumers

prior to the completion of the

transaction, e.g., the Credit Practices

Rule, 16 CFR 444.3, requires that certain

information be disclosed to a cosigner

prior to becoming obligated.

2. The Clear and Conspicuous Standard

in Traditional Media

In all cases the required or advised

disclosures must be effectively

communicated to consumers. To

achieve this general performance

standard, the Commission’s rules and

guides require that disclosures be ‘‘clear

and conspicuous,’’ using that term or

other conceptually similar

articulations.40 The Commission views

such terms as synonymous, and this

Notice collectively refers to them as the

‘‘clear and conspicuous’’ standard.

Other, more specific disclosure

standards, such as ‘‘equally prominent,’’

and ‘‘in close proximity to,’’ are

discussed below.

In order to determine whether the

disclosure is effectively communicated,

the Commission considers the

disclosure in the context of all of the

elements of the advertisement.41

Ordinarily, a disclosure is clear and

conspicuous, and therefore is effectively

communicated, when it is displayed in

a manner that is readily noticeable,

readable and/or audible (depending on

the medium), and understandable to the

audience to whom it is disseminated.42

The Commission examines a number

of factors to determine whether

disclosures in traditional media (e.g.,

print, television, and radio) meet this

general performance standard. Thus, in

print or other visual media, the

Commission may consider a disclosure’s

type size, placement, color contrast to

background, duration, and timing, as

well as the existence of any images that

detract from the effectiveness of the

message. In audio messages, such as

those delivered over the radio, the

Commission may examine the volume,

cadence, and placement of a disclosure,

as well as the existence of any sounds

that detract from the effectiveness of the

message.43 In all media, the Commission

further evaluates the language and

syntax of the disclosure to determine

whether it is likely to be understood by

the relevant audience.

3. Special Issues in Electronic Media

Because the newer forms of electronic

media transmit information in writing

and through audio and visual messages,

the same factors considered by the

Commission in applying the clear and

conspicuous standard in traditional

media apply. The special attributes of

advertising on electronic media,

however, may call for additional

guidance. Many Internet

advertisements, for example, include

scroll bars to maneuver down pages that

usually exceed one screen in length.

They also often include hyperlinks, both

to other pages on a Web site as well as

directly to other Web sites. On the

Internet and in other electronic media,

new graphics technologies create

messages that scroll, blink, spin, popup, relocate, etc.

These unique features may require the

Commission to give special

consideration to certain factors in

determining whether a disclosure is

effectively communicated on electronic

media.44 As is true for any medium, the

specific elements necessary to

effectively communicate a disclosure

may vary depending on the nature of the

advertisement and the nature of the

claim.45 The focus on, or the weight

given to, any specific factor will vary

accordingly.

4. Factors Used To Evaluate Clear and

Conspicuous Disclosures on Electronic

Media

a. Unavoidability. The Commission

believes that, to ensure effectiveness,

disclosures ordinarily should be

unavoidable by consumers acting

reasonably. On the Internet or other

electronic media, this means that

consumers viewing an advertisement

should necessarily be exposed to the

disclosure in the course of a

communication without having to take

affirmative action, such as scrolling

down a page, clicking on a link to other
Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules 25003

46The Commission is using the term ‘‘visual’’ in

this Notice to include both static visual displays

(e.g., a fixed image) and non-static video displays

(e.g., moving video clips).

47Mariea Grubbs Hoy & Michael J. Stankey,

Structural Characteristics of Televised Advertising

Disclosures: A Comparison with the FTC Clear and

Conspicuous Standard, J. Advertising, June 1993, at

47, 50; Todd Barlow & Michael S. Wogalter,

Alcoholic Beverage Warnings in Magazine and

Television Advertisements, 20 J. Consumer Res.

147, 151, 153 (1993); Noel M. Murray, et al., Public

Policy Relating to Consumer Comprehension of

Television Commercials: A Review and Some

Empirical Results, 16 J. Consumer Pol’y 145, 164

(1993).

48See, e.g., Rule Concerning the Preservation of

Consumers’ Claims and Defenses, 16 CFR 433;

Rules and Regulations Under the Textile Fiber

Products Identification Act, 16 CFR 303.41(b);

Jewelry Guides, 16 CFR 23.4; and Rule Concerning

Power Output Claims for Amplifiers Utilized in

Home Entertainment Products, 16 CFR 432.2.

49See, e.g., Leather Guides, 16 CFR 24.2(g);

Guides Against Deceptive Labeling and Advertising

of Adhesive Compositions, 16 CFR 235.7; Wall

Paneling Guides, 16 CFR 243.1(c)(4); Guides for the

Household Furniture Industry, 16 CFR 250.1(b)(2);

and Guide Concerning Use of the Word ‘‘Free’’ and

Similar Representations, 16 CFR 251.1(c).

pages, activating a ‘‘pop up,’’ or entering

a search term to view the disclosure.

b. Access to Disclosures. The

Commission believes that in order to be

effectively communicated, disclosures

should remain accessible by consumers

at all times during the communication.

Therefore, after initially viewing a Web

page that contains disclosures, a

consumer who hyperlinks to another

page should not be prevented from

returning to the page containing the

disclosures.

c. Proximity and Placement. Internet

and other electronic media

advertisements often include many

pages and the length of each individual

page can far exceed that of a traditional

off-line page. Consumers may choose

not to scroll completely through each

page and not to link to each available

page on the Web site, thus possibly

missing important disclosures.

Based on its experience in evaluating

disclosures in traditional media, the

Commission believes that the

effectiveness of disclosures is ordinarily

enhanced by their proximity to the

representation they qualify. This is

especially important for disclosures that

are made because of a triggering

representation. For example, disclosures

on the same screen as the triggering

representation are likely to be more

effective than those on separate screens.

For those disclosures that are not

required in response to a triggering

representation, the disclosure

nevertheless is likely to be more

effective if it is proximate to relevant

information.

The Commission also recognizes that

electronic media offers new ways of

placing claims in advertisements as

compared to advertisements on paper.

For example, some Web pages may use

frames to separate the screen. Although

a consumer may scroll down the Web

page, a frame can remain constant on

the side, top or bottom of the screen.

The Commission solicits comment on

whether consumers generally notice

disclosures placed within a separate

frame and the effectiveness of such

placement as compared to disclosures

that appear elsewhere on a Web page.

d. Prominence. Disclosures that are

large in size and/or emphasized through

a sharply contrasting color, and remain

visible or audible for a sufficiently long

duration, are likely to be more effective

than those lacking such prominence.

Electronic media affords new

possibilities for adding to (or detracting

from) the prominence of disclosures

through animated graphics, graphics

that facilitate segregating certain claims,

and displays that remain on the screen

for a long or indefinite duration.

Disclosures that are supported by new

display technologies such as animation,

or that are distinguished from (i.e., not

embedded within) surrounding text,

such as within a border, may or may not

be more prominent. The Commission

solicits comment on whether these

technologies, and other technologies

unique to electronic media

advertisements add to or detract from

the prominence of disclosures.

e. Non-Distracting Factors. Even if a

disclosure is large in size and long in

duration, other elements of an

advertisement may distract consumers

so that they fail to notice, read, or listen

to the disclosure. For example, Web

pages may contain large flashing images,

background sounds, or other items that

are separate from the disclosure and

may reduce the prominence of the

disclosure. The Commission solicits

comment on whether there are specific

display technologies that distract

consumers and reduce the effectiveness

of disclosures.

f. Repetition. The repetition of a

disclosure in conjunction with the claim

that triggers it tends to enhance the

likelihood of consumers noticing and

understanding them. This is particularly

relevant to Internet advertisements

which can be extremely lengthy, with

many and/or long Web pages.

g. Audio and Visual Presentation.

Some electronic media advertisements

contain both visual 46 and audio

elements. The Commission believes that

disclosures are likely to be more

effective if they are presented in the

same mode (audio or visual) in which

a triggering or relevant claim is

presented. In addition, research suggests

that disclosures that are made in both

visual and audio modes generally are

more effectively communicated than

disclosures made in either mode

alone.47 Therefore, the Commission also

believes that the display of disclosures

both visually and in audio, for those

promotions that are presented in both

modes, is likely to be more effective

than disclosures in only one.

The Commission solicits comment on

all of the factors set forth above. In

particular, the Commission solicits

comment on (1) its underlying

assumptions about consumer

perceptions regarding Internet and other

electronic media advertisements, (2) the

discussion of the state of technology,

including any existing or reasonably

foreseeable technology that is not

addressed in this Notice, and (3) the

costs and benefits of applying the

factors discussed above. The

Commission also requests comment on

specific questions listed in Part III,

below.

5. Additional Specific Standards

Contained in Rules and Guides

Some of the Commission’s rules and

guides specify in more detail the

manner in which the disclosure should

be made, instead of simply stating that

the disclosure should be clear and

conspicuous. In these instances, the

underlying objective of the rule or guide

is the same: the effective

communication of the disclosure. Thus,

the Commission intends to draw on the

factors described above, as embellished

by the specific requirements of the

individual rule or guide, in evaluating

compliance with the disclosure

provisions of the rules and guides in

advertising on electronic media.

For example, certain rules and guides

specify a particular type-size in which

the disclosure should appear or contain

language such as ‘‘of equal size and

conspicuousness,’’ ‘‘of equal

conspicuousness,’’ and ‘‘more

prominently.’’ 48 The Commission

proposes that these rules and guides be

interpreted as requiring compliance

with the general effective

communication performance standard,

as well as the specific size and

prominence criteria listed in the rule or

guide. Other rules and guides state that

disclosures should be clear and

conspicuous and in close conjunction or

proximity to a designated claim.49 The

Commission will evaluate whether the

disclosure is effectively communicated,

following the factors described above,

with a special focus on the placement of

the disclosure.
25004 Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules

50For example, in the consent orders issued in

America Online, Inc., Docket No. C–3787, Prodigy

Services Corporation, Docket No. C–3788, and

CompuServe, Inc., Docket No. C–3789, (Mar. 16,

1998), advertisements of a ‘‘free’’ offer must contain

a disclosure directing consumers to the location

where the terms and conditions of the offer can be

found, and full disclosure of the terms, conditions,

and obligations of the offer can occur during the

online registration process, prior to consumers

incurring any financial obligation.

51For example, the TV Picture Size Rule, 16 CFR

410.1, n. 2, prohibits the disclosure of required

information in a footnote to which reference is

made by an asterisk. Following the principles stated

herein, this Rule would be interpreted as not

allowing asterisked footnotes as well as their

functional Internet equivalent—placing the

disclosure in a separate location accessed by

clicking on an icon or hyperlinking to a separate

page. This is consistent with the Commission’s

proposal, discussed above, that disclosures should

be unavoidable by consumers acting reasonably.

52 Deception Statement, 103 F.T.C. at 175, 179.

Some rules and guides define the relevant audience

for analyzing the adequacy of disclosures, e.g.,

‘‘purchasers or prospective purchasers,’’

‘‘purchasers and prospective purchasers . . .

casually reading, or listening to, such advertising,’’

and ‘‘prospective purchasers.’’ See Nursery Guides,

16 CFR 18.2; Leather Guides, 16 CFR 24.2(g); and

Warranty Guides, 16 CFR 239.2(b), respectively.

Other rules and guides do not address the issue.

With respect to rules and guides that

call for the placement of certain

disclosures in a specific context, the

Commission will consider interpreting

the language in these rules and guides

to permit alternate ways of disclosing

information using electronic media, so

long as the disclosure is effectively

communicated to consumers and is

consistent with the underlying objective

of the rule or guide.50

Similarly, when rules and guides

contain specific disclosure provisions

that may not translate precisely to the

Internet, the Commission proposes to

interpret these requirements for Internet

advertising in a manner that is

consistent, to the extent possible, with

both the requirements of the rule or

guide and the underlying objective of

effective communication.51

The Commission solicits comment on

these approaches to applying specific

standards in rules and guides to

electronic media marketing, and

whether additional guidance regarding

the specific standards is necessary.

6. Perspective of the Reasonable

Consumer

In determining if representations or

practices are deceptive, in any and all

media, the Commission examines them

from the perspective of a reasonable

consumer. A representation or practice

directed to a particular group, such as

children, is evaluated from the

perspective of a reasonable consumer

within that group.52 The same

‘‘reasonable consumer’’ standard applies

to disclosures required by the rules and

guides in electronic media advertising.

III. Request for Comments

The Commission solicits comments

on the issues discussed in this Notice.

Comments should, if appropriate,

suggest specific alternatives to various

proposals and indicate why alternative

approaches would better serve the

Commission’s statutory mandate of

protecting consumers against unfairness

and deception. The Commission also

seeks comment on the following specific

questions:

Applicability of Rules and Guides to

Electronic Media

1. Does the Commission’s proposal to

clarify the applicability of its rules and

guides to electronic media provide

adequate guidance to industry and to

the public?

2. What are the costs and benefits to

consumers of the Commission’s

proposed policy regarding the

applicability of its rules and guides to

electronic media?

3. What significant burdens or costs,

including costs of compliance, would

the proposed policy impose on firms

subject to the provisions of a rule or

guide? Would the proposed policy

provide benefits to such firms?

a. What are the costs, burdens, and

benefits of the proposed policy for small

businesses in particular?

b. What changes should be made to

the proposal to reduce the burdens or

costs imposed on firms subject to the

admonitions of the rules and guides?

c. How would these changes affect the

benefits provided by the proposal?

Interpretations of Terms

4. Do the Commission’s proposed

interpretations of the terms ‘‘written,’’

‘‘writing,’’ ‘‘printed,’’ and ‘‘direct mail’’

provide adequate guidance to the

public?

5. What are the costs and benefits of

the proposed interpretations?

6. Do the Commission’s proposed

interpretations of the terms listed

encompass all the newer forms of

electronic media?

7. Are there more appropriate

alternatives to the various

interpretations of the terms proposed by

the Commission? If so, please explain

the alternative interpretation and the

benefits of the alternative.

8. Does the Commission’s discussion

of ‘‘direct mail’’ adequately address the

various new means of electronic

communication, e.g., e-mail, facsimiles

or list servers, and adequately account

for the differences inherent in these

various formats?

9. Should the Commission’s

interpretation of the term ‘‘direct mail’’

be limited to communications that are

capable of being received privately?

Should individually addressed

communications posted on Internet

Bulletin Boards or USENET groups be

considered ‘‘direct mail’’?

10. Should Web page or banner

advertisements that are targeted to

certain consumers on consumer

preference information be characterized

as ‘‘direct mail’’? If so, are such

advertisements adequately addressed by

the Commission’s proposed

interpretation? To what extent should

specific forms of online targeted

marketing (e.g., push technology or

consumer-selected ‘‘channels’’) be

considered ‘‘direct mail’’?

11. What issues, if any, need to be

addressed by the Commission regarding

the use of electronic media to deliver

information required to be provided in

writing by a rule or guide?

a. How should the Commission

address those issues?

b. Under what circumstances, if any,

should the Commission advise that

information be provided on paper and

not electronically?

12. Are there other terms in the rules

and guides that should be specifically

addressed by the Commission in the

context of electronic media? If so, how

should the terms be interpreted and

why?

Disclosures

13. Do the proposed factors for

evaluating disclosures provide adequate

guidance to industry regarding making

disclosures in electronic media?

14. What are the costs and benefits of

applying the factors proposed by the

Commission to evaluate disclosures

required or recommended by the rules

and guides?

15. To what extent will an individual

consumer’s Web browser or computer

capabilities affect the format of an

advertisement (e.g., Web page), and

therefore, the format of a disclosure?

Should the Commission advise that

advertisers take these differences into

account in designing their advertising to

ensure that disclosures are clear and

conspicuous?

16. What technologies exist to prevent

or hinder consumers from accessing a

disclosure after initially viewing it?

What are the costs and benefits of

advising against their use?

17. Are the Commission’s underlying

assumptions about consumers’

perceptions with respect to Internet and

other electronic media advertisements

accurate? Are there surveys, copytests,
Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules 25005

or other direct evidence of consumer

behavior that will aid the analysis?

a. How do consumers behave in

navigating through a Web site, reading

e-mail or viewing a CD–ROM?

i. Do consumers generally scroll

completely through Web pages or

e-mail?

ii. Do consumers generally link to

each available page on the Web site?

b. Under what circumstances are

consumers more likely to examine the

top of a Web page, rather than the

middle or the bottom of a Web screen

or page?

c. Are consumers more likely to

notice information that is placed within

a separate frame on a Web page or in

other electronic media advertisements?

d. In what circumstances, if any, must

a disclosure appear multiple times to be

effectively communicated?

18. What features and technologies

particular to advertising on electronic

media enhance or detract from the

prominence, and therefore the

effectiveness, of a disclosure?

a. Do disclosures with graphical

elements, such as pop-up features,

animation, blinking, or borders

surrounding disclosures, enhance or

detract from the effectiveness of

disclosures?

b. What features can appear in

Internet advertisements that may

distract consumers from noticing,

reading, or listening to disclosures?

19. Could the interactive nature of the

Internet present an opportunity to

assure that disclosures are noticed and

understood by the consumer (i.e., could

a consumer be required to click on an

‘‘Understood’’ button following the

disclosure before being permitted to link

to other information)? What are the

costs and benefits of using such

features?

General

21. Are there new technologies that

are not adequately addressed by the

Commission’s proposals? If so, how

should these technological changes be

addressed by the Commission?

22. Are there other issues that the

Commission should address in

clarifying the applicability of its rules

and guides to electronic media?

By direction of the Commission.

Donald S. Clark,

Secretary.

APPENDIX

Titles CFR parts

Guides for the Nursery Industry ....................................................................................................................................................... 16 CFR 18

Guides for the Rebuilt, Reconditioned and Other Used Automobile Parts Industry ........................................................................ 16 CFR 20

Guides for the Jewelry, Precious Metals, and Pewter Industries .................................................................................................... 16 CFR 23

Guides for Select Leather and Imitation Leather Products .............................................................................................................. 16 CFR 24

Tire Advertising and Labeling Guides .............................................................................................................................................. 16 CFR 228

Guides Against Deceptive Pricing .................................................................................................................................................... 16 CFR 233

Guides Against Deceptive Labeling and Advertising of Adhesive Compositions ............................................................................ 16 CFR 235

Guides Against Bait Advertising ....................................................................................................................................................... 16 CFR 238

Guides for the Advertising of Warranties and Guarantees .............................................................................................................. 16 CFR 239

Guides for the Dog and Cat Food Industry ...................................................................................................................................... 16 CFR 241

Guides for the Decorative Wall Paneling Industry ........................................................................................................................... 16 CFR 243

Guides for the Watch Industry .......................................................................................................................................................... 16 CFR 245

Guides for the Household Furniture Industry ................................................................................................................................... 16 CFR 250

Guide Concerning Use of the Word ‘‘Free’’ and Similar Representations ....................................................................................... 16 CFR 251

Guides for the Feather and Down Products Industry ....................................................................................................................... 16 CFR 253

Guides for Private Vocational and Home Study Schools ................................................................................................................. 16 CFR 254

Guides Concerning Use of Endorsements and Testimonials in Advertising ................................................................................... 16 CFR 255

Guides for the Law Book Industry .................................................................................................................................................... 16 CFR 256

Guides Concerning Fuel Economy Advertising for New Automobiles ............................................................................................. 16 CFR 259

Guides for the Use of Environmental Marketing Claims .................................................................................................................. 16 CFR 260

Rules and Regulations Under the Wool Products Labeling Act of 1939 ......................................................................................... 16 CFR 300

Rules and Regulations Under Fur Products Labeling Act ............................................................................................................... 16 CFR 301

Rules and Regulations Under the Textile Fiber Products Identification Act .................................................................................... 16 CFR 303

Rule Concerning Disclosures Regarding Energy Consumption and Water Use of Certain Home Appliances and Other Products Required Under the Energy Policy and Conservation Act.16 CFR 305

Automotive Fuel Ratings, Certification and Posting ......................................................................................................................... 16 CFR 306

Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992 ............................................. 16 CFR 308

Labeling Requirements for Alternative Fuels and Alternative Fueled Vehicles ............................................................................... 16 CFR 309

Telemarketing Sales Rule ................................................................................................................................................................. 16 CFR 310

Deceptive Advertising as to Sizes of Viewable Pictures Shown by Television Receiving Sets ...................................................... 16 CFR 410

Retail Food Store Advertising and Marketing Practices ................................................................................................................... 16 CFR 424

Use of Negative Option Plans by Seller in Commerce .................................................................................................................... 16 CFR 425

Power Output Claims for Amplifiers Utilized in Home Entertainment Products ............................................................................... 16 CFR 432

Preservation of Consumers’ Claims and Defenses .......................................................................................................................... 16 CFR 433

Mail or Telephone Order Merchandise Rule .................................................................................................................................... 16 CFR 435

Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures ..................................... 16 CFR 436

Credit Practices Rule ........................................................................................................................................................................ 16 CFR 444

Used Motor Vehicle Trade Regulation Rule ..................................................................................................................................... 16 CFR 455

Labeling and Advertising of Home Insulation ................................................................................................................................... 16 CFR 460

Interpretations of Magnuson-Moss Warranty Act ............................................................................................................................. 16 CFR 700

Disclosure of Written Consumer Product Warranty Terms and Conditions ..................................................................................... 16 CFR 701

Pre-Sale Availability of Written Warranty Terms .............................................................................................................................. 16 CFR 702

Informal Dispute Settlement Procedures .......................................................................................................................................... 16 CFR 703
25006 Federal Register / Vol. 63, No. 87 /Wednesday, May 6, 1998 / Proposed Rules

[FR Doc. 98–11942 Filed 5–5–98; 8:45 am]

BILLING CODE 6750–01–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 22 and 59

[FRL–6010–2]

RIN 2020–AA13

Reopening of Public Comment Period

for Proposed Revisions of the

Consolidated Rules of Practice

Governing the Administrative

Assessment of Civil Penalties,

Issuance of Compliance or Corrective

Action Orders, and the Revocation,

Termination or Suspension of Permits

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule; reopening of

comment period.

SUMMARY: EPA is reopening the

comment period for the proposed rule

entitled ‘‘Consolidated Rules of Practice

Governing the Administrative

Assessment of Civil Penalties, Issuance

of Compliance or Corrective Action

Orders, and the Revocation,

Termination or Suspension of Permits’’

that was published in the Federal

Register of February 25, 1998. Several

commenters requested additional time

to analyze the proposed changes. In

response, the Agency is reopening the

comment period. The original comment

period closed April 27, 1998.

DATES: Written comments must be

submitted on or before June 5, 1998.

ADDRESSES: Comments should be

submitted in writing to Enforcement

and Compliance Docket and Information

Center (2201A), Office of Enforcement

and Compliance Assurance, Office of

Regulatory Enforcement, U.S.

Environmental Protection Agency, 401

M Street, SW, Washington, D.C. 20460

or via electronic mail to cropcomments@epamail.epa.gov. Comments

submitted on paper must be submitted

in triplicate.

EPA will make available, both in

paper form and on the internet, a record

of comments received in response to

this document. The official docket will

be a paper record of all comments

received in writing or by electronic

mail. This record may be reviewed at

room 4033 of the Ariel Rios Federal

Building, 1200 Pennsylvania Avenue,

N.W., Washington, DC 20044. Persons

interested in reviewing the comments

must make advance arrangements to do

so by calling 202–564–2614. A

reasonable fee may be charged by EPA

for copying docket materials. The

Agency also will publish a copy of the

official docket on the Office of

Enforcement and Compliance

Assurance’s internet home page at http:/

/www.epa.gov/oeca/regstat2.html. The

Agency intends that this internet docket

should duplicate the official paper

record, however, if technological or

resource limitations make it infeasible

to include one or more comments on the

internet docket, the internet docket will

identify those comments available only

in the official paper docket.

FOR FURTHER INFORMATION CONTACT:

Scott Garrison (202–564–4047), Office

Enforcement and Compliance

Assurance, Office of Regulatory

Enforcement (2248A), U.S.

Environmental Protection Agency,

Washington, D.C. 20460.

List of Subjects

40 CFR Part 22

Environmental protection,

Administrative practice and procedure.

40 CFR Part 59

Environmental protection,

Administrative practice and procedure,

Rules governing hearings on field

citations.

Dated: April 28, 1998.

Eric V. Schaeffer,

Director, Office of Regulatory Enforcement,

Office of Enforcement and Compliance

Assurance.

[FR Doc. 98–12034 Filed 5–5–98; 8:45 am]

BILLING CODE 6560–50–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 261 and 279

[FRL–5969–3]

Hazardous Waste Management

System; Identification and Listing of

Hazardous Waste; Recycled Used Oil

Management Standards

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: Today’s proposal would

eliminate errors and clarify ambiguities

in the used oil management standards.

Today’s proposal, if promulgated,

would make clear when used oil

contaminated with polychlorinated

biphenyls (PCBs) is regulated under the

used oil management standards and

when it is not, that the requirements

applicable to releases of used oil apply

in States that are not authorized for the

RCRA base program, that mixtures of

conditionally exempt small quantity

generator (CESQG) wastes and used oil

are subject to the used oil management

standards irrespective of how that

mixture is to be recycled, and that the

initial marketer of used oil that meets

the used oil fuel specification need only

keep a record of a shipment of used oil

to the facility to which the initial

marketer delivers the used oil. Today’s

proposal would also amend three

incorrect references to the pre-1992

used oil specifications in the provisions

which address hazardous waste fuel

produced from, or oil reclaimed from,

oil bearing hazardous wastes from

petroleum refining operations.

In the Final Rules section of today’s

Federal Register, the U.S.

Environmental Protection Agency (EPA)

is also publishing a parallel direct final

rule containing identical amendments

which will become effective unless

relevant adverse comments are received

in response to this rulemaking. For more

information on the direct final

rulemaking process, see the

SUPPLEMENTARY INFORMATION section of

this document.

DATES: Comments on this proposed rule

must be received on or before June 5,

1998 and notice of intent to file adverse

comments must be received on or before

May 20, 1998.

ADDRESSES:

Intent To Submit Comments

Persons wishing to notify EPA of their

intent to submit adverse comments on

this action should contact Alex

Schmandt by mail at Office of General

Counsel (2366), U.S. Environmental

Protection Agency, 401 M Street, SW,

Washington, DC 20460, by phone at

(202) 260–1708, by fax at (202) 260–

0584, or by Internet e-mail at

schmandt.alex@epamail.epa.gov.

Submitting Comments

Commenters must send an original

and two copies of their comments

referencing docket number F–98–

CUOP–FFFFF to: RCRA Docket

Information Center, Office of Solid

Waste (5305G), U.S. Environmental

Protection Agency, 401 M Street, SW,

Washington, DC 20460. Hand deliveries

of comments should be made to the

Arlington, VA, address below.

Comments may also be submitted

electronically through the Internet to:

rcra-docket@epamail.epa.gov.

Comments in electronic format should

also be identified by the docket number

F–98–CUOP–FFFFF. All electronic

comments must be submitted as an

ASCII file avoiding the use of special

characters and any form of encryption.