The Venable team had a great start to our week last week attending the NAD Annual Conference in New York City. For those who were not able to attend, we will fill you in on some of the highlights with this week’s blog posts. The conference started with a bang with its move to new Battery Park digs for some additional space. The hotel was home Sunday night not just to incoming advertising lawyers at firms and in-house, but also to many of the golfers in town for the 2017 Presidents Cup. Many in our bar used to meet for a quiet drink in the lounge on Sunday night to catch up before the event kickoff. In contrast to the big leather chairs and soundless TV of the old bar, the new hotel featured a (stunning) rooftop bar with thumping club music, gleaming young millennial guests, and offering $25 cocktail popsicles. Change can be hard. But this is an exciting year of change at NAD and should be embraced.
In August, NAD announced the selection of its new director, Laura Brett, who replaces Andrea Levine after a 20-year tenure. Laura is known to all who participate in the self-regulatory process as a staff lawyer at NAD since 2012 and frequent speaker at advertising conferences. She brought as monitoring cases many of NAD’s early assessments of native advertising and influencer campaigns in an effort to give industry compliance tools before the FTC issued its statements or to provide additional guidance. She has also authored some of the most important cases in the last few years looking at use of crowd sourced data and online reviews. She came to NAD an experienced attorney with both law firm experience and public service in local politics. If you have had occasion to meet Laura, you know her as being thoughtful and measured, always listening before she speaks, and approaching each challenge with an open mind. In other words, exactly the kind of person meant to lead the helm of advertising self-regulation. It was with great excitement that attendees of the conference waited eagerly for the last panel in which Laura made her directorial debut headlining the session on NAD process and coordination with the FTC. Joining Laura for this session was Devin Domond, who is Chief of Staff for the FTC’s Division of Advertising Practices and is responsible for the day-to-day coordination with the NAD.
Laura said she was thinking long and hard about what makes NAD effective. Her mission? “We want to make it even better” (citing from the ABA’s Section of Antitrust Law 2015 Committee Report on Advertising Self-Regulation. She said she was working to talk to all stakeholders to collect additional thoughts. One thing she is making a major priority is to focus on the speed to reaching a final decision and recommendation. She understands that due to the short-term nature of many advertising campaigns, “NAD decisions might not have value to the challenger unless it comes quickly. We want streamlining and faster decisions for simple cases.” While not being critical of current practice, she noted that the decisions she has authored tend to be shorter and more streamlined. She is exploring ways to make the decisions across the board simpler. Don’t expect a return to the one-paragraph cryptic decisions of the ’80s and ’90s, however. She still will prioritize and maintain a level of detail necessary for the decisions to act as precedent and guidance for companies other than the immediate challenger and advertiser. As part of the overall effort to speed the process, Laura has promoted seasoned NAD staff lawyer Annie Ugurlayan to a new role as Assistant Director – Communications. In this role, Annie will work with new participants, both companies and law firms, to the NAD process to make sure they understand the rules and structure of the proceedings. She will be responsible for scheduling meetings, including case management meetings. Laura hopes having Annie in this role will “make the process smooth for everyone.” Laura wants to make sure new participants and everyone “has the back-up they need.” Annie will be a resource if the participants are not comfortable calling the assigned staff lawyer directly.
Laura also plans to step up NAD’s work in reaching out to consumers. “We don’t want to be the advertising industry’s best kept secret.” She asked participants at the conference to “act as ambassadors” and spread the work about the benefits of the NAD process and programs. She also plans to work with the CBBB and local BBBs to expand NAD reach. Under Laura’s watch, NAD is planning the first ever west coast mini-conference for this spring, co-hosted with CARU. (And speaking of changes, see this blog about CARU’s new director Dona Fraser.) Laura’s ultimate goal? She “wants faster results that respect the process and precedent but also runs smoother for business.” When asked about NAD’s current challenges, Laura said, “We need to better manage resources so we get faster. We are down two and a half staff attorneys. [With Laura transitioning to the director role, one existing vacancy with the recent departure for Unilever of Becky Griffith, and Kat Dunnigan taking part-time status.] We are building staff back up. That is our big immediate challenge. Long term, we need to maintain our credibility while we expand our reach.” Laura paused when asked about the weaknesses in the process but answered candidly, “Yes, there are some snags. I have heard that coming to NAD is like coming to the airlines and only as good as your last experience. We want greater consistency and more respect for the process.” When asked about the strengths of the current system, she responded that “clear transparent decision making and a build-up of precedent as industry guidance.” When asked how participants can help beyond an ambassador role, Laura asked us to “follow the rules and procedures. They matter. When NAD issues a press release, do not publish this. It undermines the process and effectiveness [when companies use the process for direct commercial gain]. And schedule meetings and extensions promptly.”
Laura and Devin then discussed the FTC referral process, which happens when a company either refuses to participate in a challenge or when a company participates but then does not agree to or comply with NAD’s recommendations. Laura explained that NAD talks to the companies that refuse to participate or comply and tries to get them to change their minds. NAD explains the referral process so no company is caught off guard. If there is an impasse, NAD sends a letter to the appropriate agency (usually, but not always, the FTC) with the case materials.
The FTC reviews and acknowledges the letter. At the same time, NAD issues a press release detailing the facts of the case and the referral. Devin explained that the FTC staff contacts and encourages the company to go back and participate. If that is not successful, the FTC reviews the facts and considers whether to open an investigation. (As an aside, while not discussed, the FTC obviously has limits on its enforcement resources and not every case is going to fit with the current enforcement priorities. Under no administration is the FTC likely to get as up in arms as we company lawyers do over whose toilet paper is softest or whose soda tastes better – these purely competitive disputes are best left to competitors.) Short of opening an investigation, the FTC might work with a company to try to bring it into Section 5 compliance voluntarily.
Devin notes she was constrained from talking about a lot of specifics because the facts of FTC investigations are nonpublic. She did encourage the audience to look at the recent closing letter sent to Total Wine & More, where the FTC worked with the company and they agreed to make certain changes to their price advertising practices. For a full and constantly updated (thanks to Devin!) list of the NAD referrals and resolutions see here. It was clear from the warm rapport between Laura and Devin from the panel, the relationship between NAD and the FTC is a close and functional one. This is no surprise given that Lee Peeler is at the helm of the ASRC, the umbrella organization over NAD, as well as NARB, CARU, ERSP, and the Accountability Program, after retiring from many years at the FTC. (And who we learned at the conference hired both Lesley Fair and Mary Engle to the FTC!) And while the FTC may not formally investigate and bring enforcement against every company referred, getting under its radar based on an NAD referral is not something any company should undertake lightly. We expect under Laura’s watch there will be even closer and perhaps more creative collaboration when needed with law enforcement. We also welcome her commitment to making NAD even better. Getting to know Laura across the NAD table, as well as speaking with her on many panels and developing a friendship over the last five years, we have no doubt she will succeed.