BBB National Programs Archive

Insurance Auto Auctions To Discontinue Claims At Issue In NAD Review

New York, New York – Nov. 18, 2009 – Insurance Auto Auctions, Inc. said it will discontinue all claims challenged by Copart, Inc., a competing salvage automobile auction house, action that the National Advertising Division of the Council of Better Business Bureaus has determined was proper and necessary.

NAD, the advertising industry’s self-regulatory forum, sought substantiation from IAA for certain claims, including:

  • “Highest Selling Prices and Returns”
  • “…produces the salvage industry’s leading returns”
  • “IAA’s data demonstrates that its hybrid model drives higher selling process…”
  • “the hybrid model is the model capable of delivering … higher selling prices”
  • “the hybrid model is the best auction model to produce the highest returns”
  • “with the highest selling returns, IAA continues to lead the North American salvage industry”
  • “record setting returns for our customers”

NAD noted in its decision that the advertiser bears the burden of establishing a reasonable basis for its claims and determined that a White Paper published by the advertiser made comparative superiority claims regarding the sales performance of its “hybrid auction model” over the challenger’s on-line only auction model, which would require reliable evidence to support.

The advertiser defended claims related to its “hybrid auction model” – which includes both online and live auctions. The advertiser argued that its internal data confirms that customers benefit from concomitant online and live auctions, but would not, for business purposes, disclose the internal data to NAD. The advertiser said, however, that it would permanently discontinue the claims and dissemination of the White Paper.

The advertiser asserted that it has voluntarily and permanently discontinued all advertising identified by the challenger, which related to having the industry leading or highest returns or highest sales prices. IAA noted that its decision to discontinue the claims was based, in part, on the challenger’s agreement to discontinue certain advertising claims, as well.

NAD, in its decision, said it appreciated the advertiser’s assertion that it would permanently discontinue the White Paper and all of the challenged claims in their entirety, an action NAD determined to be necessary and proper given the lack of supporting evidence in the record. 

IAA, in its advertiser’s statement, said that although “IAA stands behind all of its advertising claims, IAA thanks the NAD for recognizing that IAA’s decision to discontinue the challenged advertising claims resolves the issues in this proceeding.”