BNA Big Law Business Publishes Article by Andrew Lustigman and Morgan Spina on Virtual Reality Disclosure Obligations

Olshan’s Advertising, Marketing & Promotions Practice Group chair Andrew Lustigman published an article in BNA Big Law Business with Olshan associate Morgan Spina entitled “Understanding Advertising Disclosure Obligations Within Virtual Reality.” The article describes the unique challenges posed to advertisers who use virtual reality to promote their brands and the steps they can take to comply with current FTC regulations. “Although virtual reality represents a convergence of existing video game and social media technologies,” Mr. Lustigman and Ms. Spina note,“ and the FTC has already addressed disclosures and advertising in both video games and social media, virtual reality provides a new way to interact with technology. The FTC has not yet issued specific or detailed virtual reality advertising guidelines.” They point out that, although the FTC has yet to issue rules pertaining specifically to virtual reality marketing, marketers using virtual reality should treat their advertisements as they would a social media post or a video game advertisement: “Any material connection between an advertiser and an endorser should be disclosed to the consumer. The difference, however, may be in the way such disclosures can be displayed. For instance, the requirement of a specific hashtag or physical placement in an Instagram post might not be able to be transferred in the context of virtual reality.” The FTC’s “Dot Com Disclosures: How to Make Effective Disclosures in Digital Advertising” affirms that, as with other types of advertising, “augmented reality experiences” warrant a clear advertiser-endorser relationship disclosure and that the form of that disclosure must match the form of the advertising claim. Despite the similarities between virtual reality and other types of advertisements, Mr. Lustigman and Ms. Spina caution that “a content creator should not be able to reasonably rely on consumers to be aware of a connection between the presence of a product and the existence of consideration paid by the sponsor for such presence.” They conclude by stating that, until the FTC releases guidelines specifically related to virtual reality advertisements, marketers of such advertisements must be prudent: “There are no one-size-fits-all rules than can be gleaned from other sources, so virtual reality creators must be aware of both the similarities and differences in the way in which the FTC has treated social media and video game advertising.”