KKC News


The Federal Trade Commission (“FTC”) has recently increased its enforcement activity nationwide regarding advertising directed to consumers.  Although the observations here are derived from the automotive retail sphere, they apply to any advertising of consumer goods.  In particular, ads offering consumer financing or consumer leasing fall into categories more likely than ever to receive intense FTC scrutiny.  But the scrutiny is not limited to those intensely regulated areas alone – any advertising claim that might be subject to some sort of qualification or explanation can violate FTC regulation governing disclaimers and explanations.  The technique – used by many ad agencies – of relegating required disclosures, explanations, and disclaimers to the “mouse print” of a footnote can easily turn into a trap.  A mousetrap, so to speak.

 Conspicuosity 101

The FTC and State Attorneys General take the view that an insufficiently conspicuous disclosure/disclaimer/explanation is as if it never occurred at all.  The standard employed is whether an “unsophisticated consumer” would see and understand the explanation.  The hypothetical “unsophisticated consumer” as conceptualized by the FTC is a singularly “low information” individual.  Therefore footnotes, particularly mouse print micro type footnotes, don’t cut it.

Another problem frequently seen in fliers prepared by ad agencies is that the footnotes don’t even match up to the various asterisks, crosses, numbers, or other symbols in the main text.  That’s because ad agencies prepare promotional fliers for use in many different markets, and they mutate over time. A boilerplate version of the agency’s latest campaign may include material inapplicable to your campaign and when changes are made details necessary to make the flyer internally consistent are overlooked.  Sometimes the reference mark in the text does not lead to any footnote.  The quality of proofreading by ad agencies tends to be poor.

In short, consumer protection regulators invariably frown upon footnotes.

 “Now You See It, Now You Don’t” Prohibited

It is a deceptive practice, under the guise of an “explanation” or “disclosure”, to take away or limit that which you conspicuously offer in your main ad copy.  If the ad offers a thrilling bargain price on a product, it is deceptive to qualify that offer into oblivion by an explanation that limits it to being difficult or impossible to obtain.

Regulators have become, justifiably, quite upset over the technique of offering an advertised price computed by stacking every rebate together.  Advertisements have actually been written offering a new vehicle price based upon an individual qualifying for rebates such as first time buyer, armed forces service member, senior citizen, loyalty buyer, etc. all added together.  Even if not actually mutually exclusive (which is not to say that advertising a price based upon mutually exclusive rebates has never happened), the high improbability of any individual qualifying for all of the rebates blended together to reach the “low, low advertised price” makes the practice deceptive.  If some creative genius at your ad agency comes up with this idea the proper response is “devil get thee behind me.”

 Financing/Leasing Disclosures

This post does not deal with the requirements of Reg. M (Consumer Leasing) and Reg. Z (Consumer Financing), trigger terms, and the required disclosures.  That is a topic unto itself.  Insofar as mouse print is concerned, the additional disclosures required by mention of one or more “trigger terms” needs to occur in the text of the ad itself, in the same location as the trigger term, and in a typeface that, if not the same size as the trigger term mentioned (a best practice) is at any rate conspicuous.

In the context of radio or television ads, if the additional Reg. Z/Reg. M required disclosures flash across the TV screen for about two seconds, or in a radio ad the announcer sounds like an auctioneer on crack, proper disclosure under the rules is likely to be found non-existent by the regulatory agency (FTC or State Attorney General).  Again, a rule of basic common sense making the disclosure sufficiently discernable to a person of normal intellect will reduce, if not eliminate, the risk of regulatory sanction.

A Hoosier Disclosure Particularity:  Do You Feel Lucky?

Indiana’s “prize and promotions” statute eliminates any doubt as to what is required to comply with the law.  And if you do not comply, you can be charged with a Level 6 Felony.  I.C. 24-8-6-1.  The prize and promo statute requires that the odds of winning each prize, the number of available prizes, and their “verifiable retail value” be disclosed in the same size typeface and in the immediate proximity as the description of each prize itself. I.C. 24-8-3-5.    It also requires that the name and address of the promoters and sponsors of the promotion be disclosed, I.C. 24-8-3-2, and that all requirements for participation be disclosed.

In addition to the regulatory risk, there is the class action risk.  Consumers who receive a prize and promo communication that does not comply are entitled to recover a $500 statutory penalty, I.C. 24-8-6-2.  One of my clients once sent, at the behest of its ad agency, a prize and promo flier that violated the law.  One of those fliers was sent to a lawyer.  The lawyer sent a demand letter, on behalf of himself.  I called him, and found him to be a very pleasant fellow who told me that he was not interested in launching a class action, but demanded that we pay him his $500.00 statutory penalty in exchange for a release.  He explained to me that whenever he receives a prize and promo flier he reviews it for compliance, and if noncompliant, seeks his statutory penalty.  He truly is a winner most of the time when he gets one of these fliers.  He told me that the money he obtains is set aside in an account that he uses to pay for vacations, chiefly to Las Vegas.  Given the typical prize and promo flier that I see proposed by most ad agencies, his odds are much worse in Vegas than they are when he receives a prize and promo flier.

And, there is the ever-present danger that a lawyer seeking a higher return – albeit more delayed – may launch a class action against you for violating the statute.  So before you ask your prospective customers if they feel lucky, you should probably ask Harry Callahan’s question of yourself.  Make sure that your prize offerings comply with all aspects of Indiana’s statute including conspicuosity.


Make sure your advertisements make all necessary disclosures in a conspicuous way.  If your ad agency is overly fond of footnotes, you might consider sending them some d-CON.


Donn H. Wray has concentrated a substantial portion of his practice in the representation of automotive retail businesses, with emphasis on consumer defense and regulatory compliance, for 30 years.  He may be reached at dwray@katzkorin.com; phone:  (317) 464-1100.


Katz Korin Cunningham.

Same values, longer name.

Small firm flexibility, large firm sophistication.

The personalized, trusted service of Katz & Korin meets large-firm litigation expertise to blend various skill sets and build a winning culture. Coming together strengthens us as a firm and emphasizes our continued pursuit of professional growth.

We’re growing. You’re gaining.

This is more than just a merger. We’re joining forces—blending both our diverse expertise and our company cultures—an evolution that is greater than the sum of our parts. KKC attorneys are fueled by challenge and, together, bring to the table a richer, more diversified body of experience.

Learn more about

KKC brings together a shared commitment to excellence in our practices. To learn more about our team, continue to our current site.