NAD Finds Chegg Can Substantiate Savings Claims For Textbook Rentals

New York, New York – Dec. 16, 2009 – The National Advertising Division of the Council of Better Business Bureaus has determined that Chegg, Inc., an online textbook rental service, can support savings claims made at its Website, but recommended the advertiser clearly and conspicuously disclose other information that is material to its customers.

NAD, the advertising industry’s self-regulatory forum, examined Internet advertising claims made by Chegg following a challenge by the National Association of College Stores. Claims at issue in the NAD inquiry included:  

• “YOU SAVE $__”
• “SAVED SO FAR: $__”
• “SINCE 2004 STUDENTS AT OVER 6,000 CAMPUSES HAVE USED CHEGG TO SAVE $__” 
• “Save 65-85%

As a preliminary matter, the advertiser informed NAD that it had, for reasons unrelated to the challenge, permanently withdrawn its “save 65-85%” claims.  NAD noted its appreciation for the advertiser’s decision to withdraw the claim.

The challenger argued the remaining savings claims misled consumers because the advertiser failed to disclose that the advertised savings were based on a comparison of rental prices versus purchase prices, an “apples to oranges” comparison that requires disclosure. The advertiser argued that the challenger ignored disclosures in place at the advertiser’s Website – specifically that Chegg’s savings claims compare Chegg’s rental prices with publishers’ list prices for the purchase of new books.

Following its review of the evidence in the record, including consumer survey evidence, NAD determined that, with regard to the “You Save $ ___” claim, the advertiser did properly disclose the basis of the price comparison – rental costs vs. purchase costs – on each Webpage where consumers can rent books.

However, NAD recommended that the advertiser clearly and conspicuously disclose that the basis of comparison is to the list price of new books and disclose, as well, that it does not guarantee that supplemental materials – including CDs and online access codes – will be provided with rental books. NAD further recommended that the advertiser clearly and conspicuously disclose that Chegg allows no writing in a textbook, and that it restricts highlighting. With respect to the delivery charges imposed by Chegg, NAD determined that the advertiser should reference such charges when making the “You Save $___” claim.

However, NAD determined that the advertiser need not disclose (beyond the FAQ page) the fact that rented books must be returned at semester’s end, or that the renter would need to pay a penalty if he or she fails to return the book or returns it in damaged condition.

Finally, NAD determined that the advertiser’s reliance on third-party bibliographic data (as confirmed by its marketplace survey) was a reasonable method of ascertaining the “list price” of the books.

Chegg, in its advertiser’s statement, said that while it believes that the disclosure information recommended by NAD is available at its Website, “in the spirit of cooperation with the self-regulatory process,” it will take NAD’s recommendations into account in future advertising.