New York, NY – Feb. 19, 2013 – The National Advertising Division has determined that advertising for Chase Bank USA’s Chase Freedom credit card did not mislead consumers about the nature of the cards points-based rewards system.

However, NAD has recommended that the Chase discontinue claims that disparage the cash rewards program offered by Discover Products, Inc.

NAD is an investigative unit of the advertising industry’s system of self-regulation and it is administered by the Council of Better Business Bureaus.

Discover challenged before NAD the claim:

• “Your cash shouldn’t jingle in your pocket. . . Don’t get shortchanged”
• “Chase Freedom gives you a full 1% cash back from your first purchase. Unlike the
Largest Cash Back Card, which only gives you 0.25% until you spend $3,000, every
Year.” “Don’t get shortchanged.”

NAD also examined whether the advertising at issue implied that the Chase Freedom card is superior to the Discover card.

Discover argued that “shortchanged” is a disparaging term and took issue with Chase’s purported characterization of Freedom card rewards accruing as cash. The challenger noted that Chase Freedom’s advertising campaign has a consistent
“Cash Back” message.

Chase, meanwhile, contended that the “short changed” claim was a reference to Discover’s lower (0.25%) cash-back rate on the first $3,000 of ordinary purchases and NAD acknowledged in its decision the possibility that a consumer might take away only that narrow message.

However, NAD also found “… that the advertising conveyed the more general, overriding message that the Discover card, beyond providing a lower base rate for the first $3,000 of qualifying purchases, is so inferior to Chase Freedom that Discover cardholders are being cheated, or dealt with unfairly.”

NAD recommended Chase discontinue claims that state or suggest Discover customers are short-changed. NAD also recommended that the advertiser “discontinue the use of any visuals … in the context of the challenged advertising convey a message of overall superiority as to Discover.”

NAD then considered the challenger’s argument that advertising for Chase Freedom inappropriately omitted the fact that Freedom rewards are earned as points.

NAD determined that when consumers are promised a “cash back” card, they expect the ability to receive cash back. NAD noted in its decision that the Chase Freedom card does offer cardholders the opportunity to get cash back.

NAD found that the Chase Freedom card does not lose its status as a “cash back” card because its cardholders also have the opportunity to redeem their rewards in other forms, such as points or miles, and concluded that Chase’s advertising is not misleading by virtue of not disclosing that the rewards are earned as points.

Chase, in its advertiser’s statement, said that while the company “does not share NAD’s concerns with regard to the specific comparative advertisements Discover challenged, Chase discontinued those commercials and claims for independent reasons during the course of this proceeding. Should Chase determine to use such commercials or claims again, Chase will take NAD’s recommendations into account in formulating such future advertising.”