On December 19, 2019, the National Advertising Division (NAD) closed out the year with an announcement of its plans to “develop a fast-track process to more efficiently handle certain types of online and social media advertising claims.” These claims include insufficient disclosures, such as influencer posts that fail to disclose an influencer’s material connection with a sponsor; general claims that are in violation of NAD and/or Federal Trade Commission guidance, such as unending sales; and claims that are simply untrue. As part of the program’s rollout, NAD will host an exclusive fast-track process workshop in New York on January 23, 2020. The announcement follows the NAD Annual Conference this quarter where the Division discussed that it expected to see an uptick in challenges concerning consumer reviews.
The NAD plans to maintain its edge for resolving advertising disputes efficiently
Many companies engaged in advertising and marketing already prefer the NAD process for several reasons, so a fast-track process option reflects the Division’s commitment to efficiency. First, a challenge at the NAD is typically faster than a court proceeding, particularly when an advertising is not so misleading and harmful that a temporary restraining order is appropriate. Second, the process at the NAD is also less burdensome, both financially and timewise. For example, there is no document discovery and the matter cannot be delayed by filling counterclaims—saving both sides of a dispute money. Finally, the NAD is arguably more predictable than a court proceeding, since traditional judges may not be subject matter experts on advertising issues, nor have experience ruling on advertising disputes. Decision-makers at the NAD, on the other hand, are dedicated to resolving advertising disputes, and are well versed on the type of issues, nuances, and other industry impacts an advertising challenge may involve. With an ever-growing presence of advertisement disputes based on online and social media content, an announcement of a more efficient arrangement is timely as we enter the new decade.
NAD 2020 changes to its filing fee structure
Although it is unclear what the fast-track process will entail, the NAD has published changes to its filing fees that give us a sliver of the NAD’s trajectory of increasing efficiency and accessibility. The new filing fees go into effect on January 1, 2020. Notably, the price structure includes a new category where if a challenger’s gross revenue is under $250 million, the challenger must pay $10,000 to file a complaint. In the past, challengers were required to pay a minimum of $25,000 to bring a NAD challenge. This shows that the NAD is making its venue more accessible to small and mid-size companies via lower filing fees and a fast(er)-track process. As a result, the industry can expect an increase in NAD challenges by smaller companies who previously may not have had the means to appear before the Division.
In short, the NAD is focusing on efficiency and increasing accessibility to the NAD process for the new decade. Businesses engaged in online and social media-based advertising should stay tuned for a recap of the fast-track process workshop.