The NAD has a history of closely scrutinizing advertisements that include #1 claims to ensure consumers are receiving complete and accurate information.  #1 claims under NAD’s view are not puffs but convey the message that a product is the bestselling brand in the United States, unless other appropriately qualifying information is provided. Typically, when an advertisement includes a #1 claim, the NAD will expect to review market data, sales information, and/or consumer perception data to substantiate the claim.  Additionally, the NAD requires that #1 advertisements include a disclosure that sufficiently informs consumers of the specific universe in which the product is the bestselling.  The disclosure must be clear, conspicuous, and in close proximity to the qualifying claims.  Some factors the NAD uses to analyze whether a disclosure is sufficient are: (1) the prominence of the disclosure; (2) the proximity and placement of the disclosure vis-à-vis the representation that it modifies; (3) the presence of distracting elements such as text or graphics that may divert a consumer’s attention away from the disclosure; and (4) the clarity and understandability of the text of the disclosure.

Recently, Gurwitch Products LLC advertised that one of their products, Laura Mercier’s “Tinted Moisturizer,” was the #1 selling brand of tinted moisturizer. The advertisements contained a disclosure stating that this claim was “based on The NPD Group, Inc. U.S. volume sales in prestige retail YE 2012.”  The NAD analyzed the disclosure to ensure that it conformed with NAD guidelines and requested information to substantiate the #1 claim.  On May 24, 2013, the NAD determined that Laura Mercier’s “Tinted Moisturizer” was in fact the #1 selling brand according to NPD’s prestige retail market data.  However, the NPD concluded that consumers may interpret “prestige retail” to include only “high-end, luxury department stores” when the NPD’s prestige retail data includes sales from stores that sell products at lower price points.  Specifically, the NAD felt that consumers may think that prestige retail only includes stores such as Bloomingdale’s, Saks Fifth Avenue, and Bergdorf Goodman.  However, the NPD data also includes sales from lower-end suppliers such as Macy’s, Beauty.com, and Skinstore.com.  Therefore, the NAD recommended that Gurwitch Products LLC modify their disclosure to make it clear that the NPD data is based on sales information from “better” stores, as NAD felt “prestige” was an insider industry term.

This is a level of detail surprising for the NAD, and one might wonder whether the suggestion clears up the issue – do consumers really understand Macy’s is a “better” store but not a “prestige” store? Would a better fix in Internet ads be to include a link to detail the resale outlets included in NPD’s category? Or perhaps the difficulty is in defining the claim by retail outlets rather than by the product. It sounds like this brand is the bestselling amongst prestige or premium cosmetics brands. But perhaps this has its own challenges as well, as the third-party data source appeared to measure by outlet. But we can’t help but wonder if NAD would have selected this case as part of its monitoring program if the claim had been “#1 Selling Premium Tinted Mosturizer” with a footnote to the NPD source and date.

In any event, this decision reiterates the NAD’s long-held position that #1 claims include a disclosure that clearly communicates to consumers the market in which their product is the bestselling. And shows that even a claim that should be simple can be frought with peril.

*Kristin Cobb is a Venable summer associate and not admitted to practice law.