Internet Advertising
This guide is based on UK law. It was last updated in July
2006. There is an equivalent Hong
Kong guide.
Overview
The global reach of the internet makes it an attractive platform
for any company wishing to advertise its products or services. One
of the main legal problems faced by such companies is that the
advert may be subject to the laws of every country from which a
user can access the advert and these laws vary a great deal.
Following the lead of the US, regulators in the UK and elsewhere in
Europe, are beginning to take a fairly aggressive approach in
enforcing advertising laws and regulations against businesses which
fail to comply when advertising on-line.
What regulations apply?
The UK
On-line advertisers have to comply with legislation, both in
their own country and any country which the advert reaches. They
must also comply with each country's self regulatory system
relating to advertising, which works alongside the formal
legislation.
In the UK, the on-line advertiser will need to make sure he
complies with a myriad of formal legislation. Some of this
legislation is generic - for example, the Trade Descriptions Act
(which prohibits misleading descriptions) and the Consumer
Protection Act (which regulates the manner in which price
information is given). Some is aimed at the advertising of
particular products or services for example, the Financial Services
and Markets Act (aimed at financial promotions) and the UK Food
Labelling Regulations (aimed, in part, at claims that food
substances are capable of curing or preventing disease).
As well as complying with formal legislation, the advertiser
must also have regard to regimes of self-regulation dealing with
misleading advertising and unfair competition.
In the UK, an advertiser must comply with the British Codes of
Advertising and Sales Promotion. These codes have been applied to
activities on the internet on a number of occasions and the
sanctions for breach can be anything from a court order to prevent
"publication" of an advertisement or an agreement to amend the web
site to comply with certain recommendations. Again, the Codes are a
mixture of generic provisions and provisions aimed at particular
sectors, products and claims. For example, there are separate
sections of the Codes (and sometimes separate codes) relating to
adverts for alcohol, tobacco products and pharmaceuticals, and
separate provisions relating to claims as to the environmental
impact of a product.
The EU
Each country in the EU has its own consumer protection
legislation. It also has its own self-regulation system based on
the International Chamber of Commerce's Code of Advertising
Practice. In broad terms this states that all advertising should be
legal, decent, honest and truthful and should respect the cultural
differences of the relevant country.
In certain areas the regimes of the member states have been (or
will soon be) harmonised. For example, a new Directive on the
Protection of Consumers in respect of Distance Contracts is to be
brought into force by member states this year. (see our article,
The Distance Selling Regulations - A
Practical Overview.) Sometime later (currently 2004) a similar
directive will be brought into force to cover the distance
marketing of financial services. In a different field, the Tobacco
Advertising Directive will lead to a total ban on all forms of
tobacco advertising in all member states by 2006.
However, these attempts at harmonisation are restricted in their
effect: the major part of each country's advertising regime remains
nationally based and there are major differences between the
regimes in force in various countries. For example, Germany bans
certain forms of promotional activity (such as two-for-the
price-of-one offers); Spain bans adverts for 'war' toys in certain
media; Denmark is particularly strict in the rules as to adverts
directed at children.
Elsewhere
Many countries outside the EU have self-regulatory codes based
on the recommendations of the International Chamber of Commerce.
However, most also have their own national legislation.
What practical steps can be taken?
Although the internet gives a trader the opportunity to sell to
every country in the world, most traders have more restricted
horizons. The first step for any on-line advertiser is to determine
the markets he is targetting and to investigate the laws which
apply in those markets. He should then seek to comply with those
laws.
Complying with the laws of targetted markets is not sufficient
protection, however, if orders might be received from other
countries as well. The prudent advertiser will also take steps to
indicate that orders will not be accepted from non-targetted
jurisdictions and incorporate some means of screening for orders
which are nevertheless received from those jurisdictions. While it
is the advert rather than the order which potentially causes the
offence, an advertiser who can be seen to have taken steps to
exclude residents of a particular country will clearly be in a
better position to defend himself against any claim by the
authorities of that country.
If the goods on the site fall within a particularly sensitive
category the advertiser might even investigate barring access to
the site to viewers from certain areas of the world (for example,
barring access to alcohol adverts for viewers from certain Islamic
countries).
Conclusion
In the context of advertisements, the internet is simply a new
means of publication. However, because it is ubiquitous, the
approach of the advertiser has to change. Previously the advertiser
decided which markets he wished to target and placed adverts in
media circulating in those markets. Now he must decide which
markets he wishes to target, and then take steps to exclude the
effects of passively advertising in other markets. In this context
it is helpful to refer to our guide on Jurisdiction.
Any questions? Please contact struan.robertson@out-law.com
/ 0141 249 5422 or one of our other contacts.
