Advertising Compliance Service has learned that FTC's Boston and Denver offices will be shut down in "the middle of June" of this year. An inside source at FTC told us that the New York office "will be turned into an antitrust office" and will be stripped of its consumer protection functions. The same thing will happen to FTC's Cleveland office and a third FTC regional office. According to our source, the lost functions will be taken over by the "phone tree" based in Washington, DC and the FTC website, also based in Washington, DC.

The moves appear to be along the lines of a massive consolidation of federal power at FTC in Washington, DC and away from regional involvement in consumer protection matters.

(Ed.'s Note: Part II of this two-part article appeared in Advertising Compliance Service in the very next issue that was published April 19, 1999.)

FTC will hold a workshop on May 14, 1999 that's going to "explore" how its rules and guides apply to electronic media, including the Internet, e-mail and CD-ROMs. FTC had previously published a Federal Register Notice seeking public comment on this issue so that it could formulate guidance for businesses about how to comply with the law in their online advertising and commercial transactions. The implications of this workshop are truly profound as the outcome may well shape Internet commerce for decades to come.

FTC's rules and guides cover some 40 subjects ranging from use of the word "free" to use of endorsements and testimonials in advertising. What is FTC's position as to whether any or all of these rules and guides apply to the Internet? [NOTE: Advertising Compliance Service interviewed a key FTC attorney about the implications of this workshop. Her responses appear throughout this important two-part article.] Here is a just a small sampling of what she told us:

• "The Commission's position is that most of [these] rules and guides do apply to the Internet." This does include "advertising on the web."
• The Commission has jurisdiction "over almost every sector of the economy" when it comes to "unfair or deceptive practices." There's "no distinction as to where that advertising appears."

DID FTC WIN JURISDICTION
OVER THE ENTIRE INTERNET? [NOTE: This part of our two-part article answers this question. The answer may surprise or even startle most netizens. Most Internauts probably never heard of the Federal Trade Commission. They will in the future.]

Another area that FTC will look into is how disclosures should be made in electronic media ads. Said FTC:

"Many rules and guides require that material information be disclosed `clearly and conspicuously' to consumers to prevent deception. Because Internet advertising contains unique features, businesses are faced with new issues in making disclosures effectively."

FTC wants comment on the factors it would consider in evaluating the effectiveness of disclosures in Internet ads.

WHAT's MISSING FROM THIS PICTURE?

[NOTE: This part of our two-part article tells you whether FTC contends that the great bulk of its myriad complex and often highly technical advertising rules and guides already apply to the Internet.]

ANYTHING LEFT FOR THE STATES?

FTC currently works with the states on various regulatory forays or sweeps focusing on advertising/sales practices across the Internet. For example, 27 state Attorneys General, and other state and local law enforcers recently cooperated with FTC in a nationwide law enforcement sweep. The sweep resulted in 33 law enforcement actions against 67 defendants allegedly promoting Internet pyramids over the past year. [NOTE: the remainder of this section discusses the "role" of the states in the future.]

ANYTHING LEFT FOR THE REST OF THE WORLD?

[NOTE: This section discusses the "role" of other countries in advertising regulation in the future.]

TWO SESSIONS

FTC's May workshop will be divided into two sessions, focusing on the issues that generated significant public comment and that FTC believes will be useful to discuss further with participants. Session One will discuss how FTC should evaluate whether disclosures required or recommended by its rules and guides are made clearly and conspicuously in electronic media advertisements. FTC staff will ask participants at the workshop to discuss mock advertisements that highlight the issues faced in evaluating whether disclosures are clear and conspicuous. FTC is giving interested parties an opportunity to submit mock advertisements containing disclosures that may be useful for discussion at the workshop.

Session Two will discuss the interpretation of the terms "written," "writing" and "printed," as used in FTC's rules and guides, in light of the use of electronic media. This session also will discuss how electronic media may be used to comply with requirements to provide information to consumers "in writing" or by "mail."

DEADLINE: If you'd like to take part in the May 14 workshop, you must file a request by April 12, 1999. The workshop will be held at FTC's headquarters in Washington, D.C., 600 Pennsylvania Avenue, N.W. Send your submissions either to the Office of the Secretary, Federal Trade Commission, Room 159, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, or by e-mail to elecmedia@ftc.gov.

The Commission vote to approve the Federal Register Notice was 3-0, with Commissioner Orson Swindle not participating due to medical reasons.

Copies of the notice announcing the workshop and the May 6, 1998 Federal Register Notice are available on FTC's web site at http://www.ftc.gov.

NEXT ISSUE

You won't want to miss Part Two of this two-part article. It discusses whether FTC has jurisdiction over every web page on Earth that advertises or sells a product or service? You might be surprised--or even stunned--by the answer. Here's what else you'll learn in this article:

• Does FTC believe it has jurisdiction over a small Mom-and-Pop web site in Indianapolis selling gloves getting 4 visitors a day?
• Does FTC believe it has jurisdiction over a tiny Mom-and-Pop web site in Lithuania selling gloves getting 4 visitors a day?

Do you know the answers to these questions? (They're not in any of FTC's press releases!)