The Federal Trade Commission has been raising lots of concerns lately about the ways in which advertisers are using (or misusing) online disclosures.  Last year, the FTC announced that it planned to revise its business guidance on online disclosures because "some companies are wrongly citing the guides to justify practices that mislead consumers online."  The FTC isn't waiting to finalize the new guidance to bring enforcement actions, however.  For example, even before it announced that it planned to revise its guidance, the FTC entered into an $18 million settlement with Lending Club that resolved allegations that the advertiser made claims such as "no hidden fees," but then hid the additional fees in disclosures that consumers were not likely to see (such as behind a question mark). 

Courts don't always hold advertisers to as high of a standard as the FTC does, and, in some cases will sometimes expect consumers to look at advertising and packaging a bit more closely.  A recent decision from a federal district court in Illinois, however, aligns pretty closely with the FTC's current thinking on disclosures.  It's yet another warning to advertisers that some of the disclosure techniques many of them are using may not, in fact, be effective.

Travel site Hopper advertised a "Price Freeze" service.  The service allows consumers to put down a deposit in order to "lock in" the price of a flight to protect them from increases (and even decreases) in the cost of the airfare.  According to the allegations in the complaint, Hopper advertised its "Prize Freeze" service with claims such as: 

• "Freeze prices, book when you're ready";
• "Price Freeze helps you stay safe from price increases while you plan your trip"; 
• "Once you've found a price you like, look for the Price Freeze button and pay a small fee to lock in the price"; 
• "Once you've frozen the price, you can relax knowing you locked in your price"; and
• "If the price goes up, Hopper covers the price increase.  If the price goes down, you just pay the new, low price." 

Here's the issue.  Hopper doesn't cover all price increases.  It only covers up to $100 per traveler.  According to the complaint, however, consumers wouldn't know about the cap prior to purchase unless they clicked on a "more information" link or clicked on a circled "i" link.  As the court explains, pointing to the fact that the disclosures are not unavoidable, "Hopper does not require consumers to view this additional information in order to use Price Freeze." 

A plaintiff sued, alleging false advertising and other claims under Illinois law.  Essentially, the plaintiff argued that Hopper's "Price Freeze" claims were false and misleading because they falsely communicated that consumers would be fully protected from any price increases, which was not the case. 

Under Illinois law, a practice is deceptive if it creates a likelihood of deception or has the capacity to deceive a reasonable consumer. Hopper moved to dismiss, arguing that its "Price Freeze" claims were not deceptive to reasonable consumers because it never represented that it covered the "full" price increase beyond the $100 cap.  

The court denied Hopper's motion to dismiss, holding that the plaintiff's claim -- which was based on statements like "if the price goes up, Hopper covers the price increase" -- was not unreasonable or fanciful.  

The court also really honed in on the disclosure issue, holding that, "the fact that Hopper in some places conveyed that it would only cover up to $100 . . . if a consumer's flight increased in price does not defeat [the plaintiff's] claim at this stage."  The court further explained, "the Court cannot assume at this stage that [the plaintiff] and reasonable consumers would click on a 'more information' link where the website or mobile application does not require it for purchase." 

The court -- essentially echoing what the FTC has been saying -- was not at all persuaded that a disclosure that's behind a link, and that's not unavoidable, is something that consumers are going to necessarily see.  If you've got an important disclosure -- one that is necessary to prevent a claim from being misleading -- you're need to ensure that it's in a place that will actually be seen, read, and understood by consumers. 

Acosta v. Hopper (USA), Inc., 2023 WL 3072358 (N.D. Ill. 2023).