BBB National Programs Archive

NAD Recommends Bank of America Modify Broadcast Advertising for ‘1-2-3 Cash Rewards Credit Card’ Following Challenge from Chase

New York, NY – Nov. 29, 2012 – The National Advertising Division has recommended Bank of America revise broadcast advertising for its “1-2-3 Cash Rewards Credit Card” to more clearly disclose limitations. The advertising claim at issue – “1% Cash Back on all purchases, 2% total cash back on purchases of groceries, and 3% cash back on purchases of gas” – was challenged before NAD by Chase Bank USA, NA.

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

It is well established that advertising must clearly and conspicuously disclose material facts, defined as “those that are important to a consumer’s decision to buy or use a product.”

Chase argued that Bank of America inadequately disclosed that its bonus rewards are subject to a $1,500 quarterly spending limit in the aggregate and thus overstate the ability of cardholders to earn bonus cash.

Bank of America, which revised the challenged advertising during NAD’s review, contended that its customers have multiple points of contact with the bank while applying for a credit card, and receive multiple disclosures of the existence and amount of bonus reward limitations.

The company also argued that the dollar amount of the quarterly combined spending cap on bonus rewards was not material to consumers.
Bank of America noted that only a small percentage of its customers ever reached the rewards cap; argued that because the limitation affected only a small minority of consumers, the company contended, the dollar amount of the cap was not material and did not need to be disclosed.

Further, Bank of America asserted, the $1,500 rewards spending cap was becoming an industry standard. The three largest players in the cash rewards credit card market – Bank of America, Chase, and Discover – each apply a $1,500 quarterly cap for bonus rewards.

NAD noted that the issue before it was not whether the rewards spending cap affected current Bank of America 1-2-3 Cash Rewards Credit Card holders, but whether the cap would impact a consumers’ decision to apply for or use the credit card.
In determining whether the $1,500 cap was material, NAD noted that there was no consumer perception evidence. NAD used its expertise to determine whether a $1,500 spending cap on bonus rewards was a material term that would impact a consumer’s decision to apply for such a card.

Following its review, NAD recommended that Bank of America modify its 1-2-3 Cash Rewards Credit Card advertisements to disclose, in a clear and conspicuous manner, in the four corners of the advertising where the main claim appears, that the 2% and 3% bonus rewards have a combined spending limit of $1500 per quarter.

NAD recommended that the revised television advertisement for the 1-2-3 Cash Rewards Credit Card be further modified so that the disclosure, if displayed as a super, appears prominently in a large type that is easy to notice, read and understand and set against a contrasting background without on-screen movements and any other distractions.

Bank of America, in its advertiser’s statement, said it “disagrees with the NAD’s conclusion that the disclosure regarding the gas and grocery bonus rewards quarterly spending cap in the television advertisement at issue is not sufficiently conspicuous, particularly because the disclosure meets or exceeds network guidelines in every respect and remains on the screen at all points in the ad where the bonus rewards are discussed.”

Further, the company said, it “does not believe the amount of the cap is a material limitation because it is simply not relevant to the vast majority of its card holders.”

However, the company said, it will “take into account NAD’s decision in its future advertising and hopes its competitors will do the same.”