FCC Revives Its Own Native Advertising Rule: Sponsorship Identification

by Ian D. Volner and Kathleen K. Sheridan on Jan 17, 2018 2:40:45 PM Government Relations

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The FCC’s Sponsorship Identification Rule is a close, perhaps neglected cousin of the FTC’s Enforcement Policy Statement on Deceptively Formatted Advertisements, i.e., its Native Advertising Guide. Nevertheless, the FCC’s latest enforcement action demonstrates how failure to follow the rule can result in penalties far larger than any imposed to date by the FTC. It also hints at the possibility that a single ad can result in dual liability for advertisers and broadcasters.

The Sponsorship ID Rule is fairly straightforward: if a broadcast station charges or accepts (or is promised) any money, service, or other valuable consideration in exchange for airing a piece of programming, then the broadcaster must disclose – at the time of the broadcast: (1) that the programming is “sponsored,” “paid,” or “furnished,” and (2) the identity of the sponsor. The Rule contains additional disclosure requirements for political ads, as well as “beneficial owner”-type provisions that require disclosure of the true sponsor in interest, rather than the name of any agent or middleman used to furnish the payment. A corollary to the Sponsorship ID Rule imposes a similar burden on sponsors to disclose to broadcasters when they have provided money, services or other consideration in exchange for the broadcast. 47 U.S.C. § 508.

Ordinary television commercials for goods and services – especially short form ads (e.g., 10- and 30-second spots) – generally satisfy the Rule without need for a specific disclosure if the ad mentions the sponsor’s corporate or trade name, or the name of its product, and “it is clear that the mention of the name of the product constitutes a sponsorship identification.” 47 C.F.R. § 73.1212(f). In other words, the commercial nature of ordinary product ads is usually obvious, and the identities of their sponsors are usually equally obvious. (Of course, the obviousness of an advertisement depends on the audience, which is why child-targeted ads and infomercials have developed additional guidelines and disclosure requirements.)

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 About the Authors

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Ian D. Volner has litigated before federal and state courts, the FCC, the FTC and the Postal Regulatory Commission on the full range of direct marketing and communications issues, resulting in savings of millions of dollars annually. He has testified before Congressional committees on numerous occasions on behalf of clients and actively participated in the drafting of a number of major legislative initiatives at both the federal and state level. He and his colleagues regularly provide advice and counsel in transactional and regulatory compliance matters to direct marketers, mass media companies, and other consumer service and consumer product enterprises.

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Kathleen K. Sheridan's practice is focused on advertising and privacy. She counsels clients on the use of testimonials and endorsements, native advertising, claims substantiation and labeling, negative option enrollment, and compliance with online behavioral advertising principles. Sheridan also helps clients navigate data breach notifications, draft and implement privacy policies, and conduct privacy risk assessments. In addition, She has an extensive background in global trade and anti-corruption compliance, including advising clients on sanctions and import/export controls, investigating anti-corruption whistleblower complaints, and conducting FCPA risk assessments. She has negotiated privacy, advertising, and trade issues in M&A, equity, and debt transactions, and has litigated consumer protection, gaming, antitrust, and corporate governance matters.

Ian D. Volner and Kathleen K. Sheridan's blog
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