National Advertising Division Refers Comparative Advertising Claims made by Zscaler to Federal Trade Commission for Further Review
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New York, NY – November 30, 2022 – The National Advertising Division (NAD) of BBB National Programs has referred advertising claims made by Zscaler, Inc. to the Federal Trade Commission (FTC) after the company failed to respond substantively to a challenge into claims made for its Zero Trust Exchange Platform. NAD recommended that Zscaler discontinue claims about various privacy protection attributes and benefits of its Zero Trust Exchange platform versus the technical capabilities of Prisma Access, the platform of challenger Palo Alto Networks.
Although Zscaler contended that NAD did not have jurisdiction to consider this challenge, NAD determined that, pursuant to NAD/NARB Procedures, it has jurisdiction over the advertising claims at issue in this case because:
- A non-disclosure agreement between the advertiser and an entity not party to these proceedings did not protect advertising claims contained within a marketing brochure from NAD’s review, although the advertiser argued the challenger tortiously interfered with a third-party confidentiality agreement. For policy reasons, it is important that advertisers not use a cloak of confidentiality to hide misleading advertising.
- The marketing brochure in which the challenged claims appear is a carefully prepared seventeen-page document with extensive design elements that suggest it was intended for broad dissemination. The advertiser acknowledged that it was provided to multiple recipients to promote the benefits of Zscaler’s security platform and, as a result, constitutes national advertising as defined in NAD/NARB Procedures.
NAD routinely considers challenges involving highly complicated technologies from many industries without issue and concluded that the issues in this case are not so technical that they are beyond NAD’s review.
Because Zscaler did not submit any argument or evidence to support its claims on the merits, the NAD/NARB Procedures allow NAD to conclude that Zscaler failed to meet its burden of providing a reasonable basis for its claims.
NAD/NARB Procedures further require advertisers to state in writing at the close of the case whether they intend to comply with NAD’s recommendations or appeal NAD’s findings. Zscaler declined to submit this written statement. Therefore, pursuant to NAD/NARB Procedures, NAD referred this case to the FTC and other regulatory authorities for review and possible enforcement action.
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