BBB National Programs Archive

NAD Recommends Capital One Discontinue Certain Claims for Spark Cards; Company to Appeals NAD’s Findings

New York, NY – Nov. 13, 2012  – The National Advertising Division has recommended that Capital One Bank (USA), N.A., discontinue print, broadcast, and website advertising challenged by Chase Bank USA, N.A. Capital One said it will appeal NAD’s decision  to the National Advertising Review Board.

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

In this case, NAD considered how consumers would interpret the advertiser’s claims that its small-business Spark cards offer the “most rewards,” the “most cash,” or the “most miles.”
Following its review of the evidence in the record, NAD determined that consumers could  take away the message that typical Spark cardholders would earn more “rewards,” “cash,” and “miles,” than typical consumers who have competing cards.

NAD noted in its decision that an advertiser making such a claim “need not show that each and every consumer would earn the ‘most rewards,’ whether cash or miles, compared to each and every holder of a competing card. Rather, the advertiser needed to substantiate the claim as to the ‘typical’ cardholder.”
In a previous case, NAD had noted that it is “exceptionally difficult” to substantiate “overall superiority claims in this particular product category.”

In this case, Capital One provided NAD with research that purportedly addressed the spending habits of typical small-business consumers. The advertiser argued that its evidence demonstrated the amount that card holders’ spend in various categories and in total, and the amount of rewards that these typical spenders would receive using its Spark cards compared to competing programs.
While NAD noted that it appreciated the multiple kinds of evidence provided by Capital One, it had certain concerns about the evidence.

In reviewing Capital One’s own internal spending data, NAD questioned whether the advertiser was justified in extrapolating spending patterns from its own cardholders to cardholders throughout the large, diverse, and ever-changing marketplace of small business credit cards. Although the advertiser argued that its own array of business rewards credit cards are representative of the marketplace as a whole, NAD was not persuaded that the evidence in the record supported that assertion.

NAD also reviewed benchmark data provided by a data-collecting organization that serves the financial services industry. The organization does not release information about which small-business cards and card issuers are surveyed.
“Given the absence of data showing which cards and issuers were included in the survey, NAD declined to unquestioningly accept the data as broadly representative of the marketplace. In sum, NAD concluded that the benchmarking data provided some additional evidence of consumers’ spending habits – but failed (on its own, or in conjunction with Capital One’s internal data) to satisfy the ‘exceptionally difficult’ task of substantiating superiority claims as between competing rewards credit cards.

Finally, NAD determined that a survey commissioned by the advertiser to produce a representative record of credit card spending among a nationally representative sample of small businesses was not sufficiently reliable for the purposes of claim support.

NAD was troubled by the internal inconsistency of the survey results. Further, NAD noted, “in light of the fact that approximately half of the respondents acknowledged that they did not consult their financial records when answering the questions, NAD determined that the likelihood of error was significant.”
Viewing the evidence cumulatively, NAD determined that Capital One’s evidence was insufficient to support its unqualified “most rewards,” “most miles,” and “most cash back” claims, and recommended that these claims be discontinued.

Capital One, in its advertiser’s statement, took issue with NAD’s decision and will appeal NAD’s findings to the National Advertising Review Board (NARB).