BBB National Programs Archive

NAD Examines Claims for Capital One’s Cash Rewards Card Following Chase Challenge

New York, NY – March 19, 2013 – The National Advertising Division determined that Capital One Bank (USA) N.A. took necessary and proper action in discontinuing certain television commercials for its Cash Rewards credit card. NAD determined that a separate set of broadcast ads and a related direct mail advertisement were not misleading.

NAD is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus.
Comparative rewards claims made by Capital One in broadcast and direct mail advertising for its Cash Rewards credit cards were challenged by Chase Bank USA, N.A., a competing credit card company.
The following claims served as the basis for the inquiry:

• “50% more cash back”
• “EARN BONUS CASH BACK on every purchase.”

NAD also examined whether the advertising at issue implied the following:

• Capital One Cash Rewards cardholders get 50% more cash back than its competitors.
• Chase Bank limits the cash back a cardholder earns with the Chase Freedom card and Capital One does not.
• Capital One Cash Rewards Card is the only card that allows cardholders to earn bonus cash back.

The issue in this case was whether the challenged advertising clearly and truthfully communicated the material components of the advertiser’s Cash Rewards credit cards.

The challenger contended that the advertiser’s Cash Rewards Campaign (in particular its television commercials with celebrity spokesman, Jimmy Fallon) falsely implied that the advertiser offered consumers 50 percent more cash back from its credit card than cards from competing issuers, including its own Freedom card.

While the advertiser maintained that it was promoting the ability of its cardholders to earn a 50 percent annual bonus, the challenger argued that the net impression reasonably created by the Cash Rewards advertisements was that cardholders would earn 50 percent more cash back than they would with other cash rewards programs.

Three sets of commercials, all featuring Mr. Fallon, were challenged before NAD; the first set had been permanently discontinued before NAD’s review and NAD closed its inquiry regarding those claims.

The second set of commercials was permanently discontinued during the course of the NAD’s proceeding. However, the ads were on the air at the outset of NAD’s review and were examined by NAD. NAD determined that the commercials reasonably conveyed the unsupported message that consumers get 50 percent more cash back than with competing cash rewards cards. Accordingly, NAD appreciated the advertiser’s permanent discontinuance of these commercials, action NAD deemed “necessary and appropriate.”

The third set of commercials, NAD noted, was very different from the first and second iterations. NAD determined that any potential confusion from the earlier commercials had been substantially removed because the advertiser made clear the basis of the “50% more cash” claim – one percent cash back on every purchase, plus a 50 percent annual bonus on the one percent cash back earned in the prior year. However, because the “1% Cash Back” and “50% Annual Bonus” signs were obscured at times during one of the commercials, NAD recommended that the signs be made visible at all times when shown in future commercials.

NAD noted that the advertiser had permanently discontinued claims made in its 2011 direct-mail advertisement that Chase Freedom limits cash back earning opportunities, an action NAD deemed necessary and appropriate. NAD determined that a November 2012 direct mailer – now discontinued – was truthful and accurate, given the targeted nature of the mailing and the differentiation of the $100 one-time bonus from the cash back bonus offer.

Capital One, in its advertiser’s statement, said it appreciated “NAD’s careful review of this matter and will take into account NAD’s findings and recommendations when designing future advertising.”