National Advertising Division (NAD)

This post is authored by Fox Rothschild associate Rashanda Bruce.

The National Advertising Division (NAD) announced revisions to its procedures governing advertising industry self-regulation during its Annual Conference on September 24-25. The revisions are in response to recommendations by the ABA Antitrust Section’s Working Group.

NAD is a branch of the Council of Better Business Bureaus (CBBB) responsible for monitoring the truthfulness and accuracy of all media advertising. NAD works to increase and maintain the public’s confidence in advertising by independently examining advertising claims that breach these standards. In addition to its independent review, NAD accepts consumer complaints about misleading advertisements and provides a forum for competitors to resolve advertising disputes.

The most recent revisions relate to NAD’s handling of competitors’ advertising claims that were previously recommended for modification or discontinuation. In the past, when NAD found that an advertising claim was unsubstantiated, it issued a decision recommending discontinuation or modification of the claim. NAD refused to reopen a case if an advertiser later proved its claims and wanted to resume advertisement. Under the new revisions, advertisers who believe they have developed new substantiation for their original advertising claims may now either resume use of the disallowed claim and request that NAD consider the new evidence, or the advertiser may seek NAD’s review of the new evidence prior to resuming the claims.

NAD made additional revisions to its procedures including: (1) identifying who should be contacted about a pending or closed case; (2) increasing the filing fee for challengers who have been National Partners of the Council of Better Business Bureaus for less than one year; (3) amending the construction of the Advertiser’s Statement to remove the option for advertisers to state that they will not comply with NAD’s recommendations; and (4) adding language to the section governing compliance decisions.

Laura Brett, the National Advertising Division Director, said NAD believes “the change balances allowing advertisers to make truthful, substantiated claims with the need for speed and finality in the self-regulatory process for competitive challenges.” Read the full text of revisions here.

When hoping to resolve advertising concerns or disputes quickly and easily, companies should not only consider utilizing the National Advertising Division (“NAD”), but also the potentially lesser-known Electronic Retailing Self-Regulation Program (“ERSP”).  ESRP is a self-regulatory program administrated for the Advertising Self-Regulatory Council (“ASRC”) by the Council of Better Business Bureaus.  The program was established in 2004 and its mission is “to enhance consumer confidence in electronic retailing by providing a quick and effective mechanism for resolving inquiries regarding the truthfulness and accuracy of claims in direct response advertising.”

Like actions before the NAD, ERSP actions provide guidance regarding certain advertisements.  ERSP is focused on reviewing direct-to-consumer advertising campaigns—largely infomercials but also radio ads, internet marketing efforts, TV shopping channel marketing, and pop-up advertising—for substantiation of claims, with the goal of preventing continued dissemination of deceptive claims.  ERSP members, as well as consumer or advocacy groups, can refer campaigns to ERSP for review, and ERSP reviews approximately 7-10 per month.  After review, ERSP may recommend that marketers discontinue making certain claims and may even alert the Federal Trade Commission about non-compliant companies.  ERSP reports that it has worked with companies to modify or discontinue use of almost 200 advertisements.

For more information, visit the Electronic Retailing Association’s website or read the ASRC’s blog posts regarding recent ERSP actions.