Posted: May 12, 2023

Are You Hiding Material Disclosures Behind Hyperlinks?

.com Disclosures: Hyperlinks are OK under certain conditions

The 2013 .com Disclosures contemplated the use of hyperlinks to lead to a disclosure, subject to certain conditions regarding how to communicate the disclosure appropriately to consumers.

June 2022 - FTC Heightened concern: "burying disclosures behind hyperlinks

In June 2022, the FTC announced that it plans to review and update its 2013 .com Disclosures.

The FTC's reason for updating the guidance: ”some companies are wrongly citing the guides to justify practices that mislead consumers online.”

Specific FTC concern: “burying disclosures behind hyperlinks.”

Hopper (USA) class action lawsuit

On April 14, 2023, an Illinois federal district court rule ruled against Hopper (USA) in a class action lawsuit under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA).

The ruling closely aligns with the FTC's specific concern regarding hiding material disclosures behind hyperlinks.

The plaintiff's claim: Hopper was deceiving consumers with its “Price Freeze” claims.

Hopper operated a travel site that allowed consumers to pay for a deposit to "lock in" the price for an airline reservation.

Hopper promised consumers that the lock-in price would protect them from future airfare increases, among other things.

Two of Hopper's ad claims:

• “Price Freeze helps you stay safe from price increases while you plan your trip.”
• “If the price goes up, Hopper covers the price increase. If the price goes down, you just pay the new, low price.”

The Catch: the Price Feeeze only covered up to $100 per traveler, and the disclosure was hidden under under a “more information” link not required to be clicked for purchase.

The Court applied the reasonable consumer standard required by ICFA.

Hopper court ruling

Holding: "The Court cannot assume at this stage that [the plaintiff] and reasonable consumers would click on a 'more information' link where the website or mobile application does not require it for purchase."

Takeaway

The FTC's revision of the 2013 .com Disclosures and the Hopper ruling should send a clear message to marketers that hiding material disclosures under hyperlinks will no longer be tolerated.

According to the Hopper court, if you do place a material disclosure under a link, it should at the very least, be required to be clicked as a condition of purchase.