Protecting Consumers Against False Advertising: Lessons from the National Advertising Division

Mar 3, 2021, 09:00 AM by Katherine Armstrong, Deputy Director, and Zheng Wang, Attorney, National Advertising Division

During this year’s National Consumer Protection Week (February 28 – March 6), intended to raise awareness and provide education on consumer protection issues, it is worth taking a closer look at how advertising fits into the consumer protection puzzle.

Consumer protection is critical to a robust and competitive marketplace. Collaborating with businesses to enhance consumer trust is core to our mission at BBB National Programs. And within our National Advertising Division, the nation’s self-regulatory body that has monitored advertising for truth and accuracy since 1971, we work with in-house and outside counsel to promote fair competition and support innovation in the marketplace.  

Without trust in the marketplace, both consumers and competition are injured. In 2020 during the COVID-19 pandemic, our review of false and misleading advertisements preying on the health and financial security of consumers rose by 50%.  

To help protect against eroding trust resulting from inaccurate and misleading claims, not only related to COVID-19, but in the marketplace in general, businesses and their in-house or outside legal counsel can act. When faced with false or misleading claims, companies have a variety of options, including sending a cease-and-desist letter to the competitor, filing a complaint with the appropriate regulatory body such as the FTC or local consumer protection agency, initiating legal action, or filing a National Advertising Division challenge.

 

 

When you want to challenge false or misleading advertising, filing with the National Advertising Division has seven distinct advantages.  

  1. Lower cost and burden. It is significantly cheaper and less burdensome to go through our proceeding than litigation. There is no discovery. There are no trials. Witnesses may attend meetings, but they are not cross-examined.
  2. More flexibility. The National Advertising Division is more flexible than litigation or complaints to government entities, both procedurally and substantively. Parties in a proceeding are generally free to adjust the briefing and meeting schedule by agreement and can easily reach the attorney by email, Microsoft Teams/Zoom, or telephone. Moreover, regulators are typically bound in scope–state attorneys general only have jurisdiction over activities in their state, while federal agencies only have jurisdiction to the extent their enabling statute allows. The National Advertising Division, on the other hand, may review any national advertising, regardless of subject matter.
  3. Quick relief. Litigation in court can take years to resolve, and it can take even longer to see any results, if there are any, from complaints to governmental entities. A standard track challenge, on the other hand, takes only a few months to finish. The new NAD Fast-Track SWIFT process lives up to its name, issuing a decision within weeks of the challenge.
  4. Institutional knowledge of advertising law. The National Advertising Division's focus is solely on advertising issues, with attorneys who review hundreds of advertising cases–and only advertising cases–every year. This focus not only builds up a wealth of precedential case knowledge but also means that each attorney knows advertising law extremely well and quickly understands the issues associated with any challenge.
  5. Confidentiality and lack of publicity. While the challenge is pending, proceedings are confidential. That means there will be no publicity surrounding the filing of a challenge. Moreover, even after the final decision is released, the parties may not use the decision for any promotional purposes. 
  6. Regulatory standard of proof. In litigation, the plaintiff bears the burden of proving that an advertising claim is false or misleading. In contrast, the National Advertising Division holds advertising to the regulatory standard, that all advertising claims should have substantiation prior to their dissemination. As a result, an advertiser has the initial burden of substantiating its advertising claims. 
  7. No counterclaims. Advertisers in a challenge cannot bring counterclaims, and our attorneys will generally not review advertisements outside the scope of the challenge (such as the challenger's own advertisements). This does not, however, prevent advertisers from initiating their own separate challenge or the National Advertising Division from opening an inquiry itself.

 

While National Consumer Protection Week is marked for only one week of the year, the National Advertising Division is working to enhance consumer trust 52 weeks a year and has been doing so for five decades. When a party to a challenge does not agree with the case decision, an appeal may be made to the National Advertising Review Board, also created in 1971 and today served by 87 advertising industry and academic luminaries who are empaneled to rule on cases brought to that body. 

Reinforcing the importance of its work, these programs are part of BBB National Programs, an independent non-profit organization where businesses turn to enhance consumer trust and consumers are heard. BBB National Programs operates more than a dozen industry self-regulation programs.

 

How to Report False Advertising

Complaints submitted to the National Advertising Division should specify the advertising claims being challenged and include any evidentiary exhibits, such as examples of the challenged advertisements, as well as relevant studies or reports that support the challenge. 

Specific details about filing a challenge, including the NAD Fast-Track SWIFT process for single-issue claims, can be found on our website. Contact us at nad@bbbnp.org if you have any questions about bringing a challenge. 

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