A Review of Recent National Advertising Division Cases

September 11, 2012

David G. Mallen

National Advertising Division

Deputy Director

The Advertising Industry’s Self-Regulatory System

1971 - The Self-Regulatory System formed as a response to consumer activists pushing for increased government regulation of the advertising industry

Six major advertising and marketing trade associations and the Council of Better Business Bureaus form the self regulatory system.

Advertising Self-Regulation

ASRC

Establishes policies for the

self-regulatory structure

NAD

Resolves issues as to the truth and accuracy of national

advertising claims

NARB The appellate body of the

self-regulatory forum

CARU Analyzes and evaluates

advertising directed to children under 12

ERSP Resolves issues as to the truth

and accuracy of claims made in direct marketing

Children’s Food and Beverage Advertising Initiative

How is an NAD Inquiry Initiated?

• Competitors

• Consumer complaints

• Referral by local BBB

• NAD monitoring program

• Trade associations

• Advocacy groups

• Federal Trade Commission

How The Process Works

• Complaint letter written by the “challenger”

– Identify the advertising and set forth why claims are false or misleading

– Include relevant evidence such as product testing or evidence of consumer perception

• Two Rounds of Evidentiary Submissions

• Meetings with NAD

• NAD decision

NAD Case Reports

Available via online subscription at: http://www.asrcreviews.org

Archives serve as a research tool: Legal, Marketing and Science

Issues and Claims

• Puffery

• Consumer surveys

• Product testing

• Testimonials

• Pricing

• Disclosures

• Green Claims

• Social Media

NAD Analysis

• What are the claims being made?

– Expressed Claims

– Implied Claims

• What is the support for the claim?

• Is it a good fit?

Health & Nutrition Claims

Sunny Delight Beverage Co (Fruit 2O Essentials) Case #5182 (May 2010).

“More than 99% Natural Ingredients”

Heartland Sweeteners LLC (Ideal Sweetener) Report #5125 (December 2009)

Green Claims

Old Generation: • General

Environmental Benefit

• Biodegradable • Recyclable

New Generation: • Renewable Energy • Seals & Certifications

NAD and Green Marketing

• FTC Green Guides apply when advertising to the trade.

• Ecologic, NAD Case # 5388 (2011)

The organic additive that renders plastics products biodegradable

Product Disparagement and User Generated Content

LaLa USA (La Crème), NAD Case # 5359

Puffery

“…a seller's privilege to lie his head

off, so long as he says nothing

specific, on the theory that no

reasonable man would believe him,

or that no reasonable man would be

influenced by such talk."

Comparative Product Testing

LG Electronics USA, Inc. NAD Case #5416 (2011)

Consumer Surveys

Based on consumers who are

very satisfied with their current

TV Provider

Taste and Preference Claims

Preferred over the Leading Meat Lasagna*

*Preferred over the leading frozen 21 oz. lasagna with meat and sauce

Apples to Oranges Comparisons

• Three Meat and Four Cheese Lasagna vs. Meat and Sauce Lasagna

• 31 oz. product vs. 19 oz. product

• Line Claim?

• Disclosures

• Sensory Testing

NAD Case Report # 5400 (2011)

“

Coastal Contacts, Inc., #5387, NAD/CARU Case Reports (October 2011).

What does it mean to “Like” a company on Facebook?

Endorsement?

“This one has the most friends.”

• NAD case reports are available via online subscription at: http://www.nadreview.org/

• Search by issue, company, date or key phrases

NAD Case Reports

Thank you!

David G. Mallen 212-705-0121 dmallen@nad.bbb.org@nad.bbb.org