We blogged on this phenom not too long ago and were surprised to see it come up again so quickly. It is too early to call it a trend, but certainly not a one off. The Challenger promotes to business customers an NAD recommendation to modify or discontinue claims made by a competitor. And the Advertiser defends itself to the customers and allegedly misstating the NAD’s decision. The NAD came out with dueling press releases criticizing both parties for failing to uphold their end of the participation agreement — not using a decision for promotional purposes and not mischaracterizing the NAD’s decision.

The underlying case involved a challenge of Generac Power Systems claims by Kohler. Kohler took issue largely with the green promises its rival was making about its standby household generator. (A product in the wake of Sandy is likely flying off the shelves regardless of the marketing efforts of the manufacturers.). As reported in the press release, Kohler told the NAD that its subsequent communication to customers was “inadvertent”. Drat the rogue employee. Generac, which informed NAD of the Kohler customer reach out, also responded with a “lengthy” communication of its own to customers that NAD asserted “omitted key information about NAD’s findings and mischaracterized the outcome.” In this press release, we have a statement of disappointment from Director Andrea Levine that such “manipulation of the self-regulatory system is unseemly and inappropriate.” (And for those of you who are regulars at NAD, you know disappointing Andrea is never a happy event.) In statements to Law360, Generac said they did not mischaracterize the decision and only was “compelled” to reach out to customers to rectify a wrong.

After going through an NAD proceeding, the last thing a disappointed Advertiser wants is more negative publicity. Both parties should spend the time post-decision pre-publication to consider a PR response if the company gets questions from a customer or the media, anyone who sees the NAD release. And to educate the sales force about the fact of the decision and what is/is not appropriate to say. It does strike us that a remedial communication by an Advertiser in such a case might be appropriate. And to deter promotional misuse of NAD decisions, the rules might be updated to allow for appropriate corrective action, perhaps with review and approval for language by NAD. Another thing to ponder is just what is the fallout from such “unseemly” conduct. NAD’s process promises to be objective and fair, so it cannot show bias to a party for such conduct in the next challenge. But it can certainly have an effect even if subtle on a company or advocate’s reputation before the NAD Staff, which is relatively stable and prone to institutional memory. On the macro level, like the trend we have seen with more class actions being filed in the wake of an NAD decision, if such promotional use of decisions becomes a trend, it could certainly undermine the faith and trust in the self-regulatory process. Messaging around what can and cannot be done with an NAD decision within your organization to people likely to know about the decision and communicate with customers, suppliers or other third parties is just good sense.