Guarantees are a common marketing practice and can have two meanings—the marketers guarantees product performance or, perhaps related, the marketer promises the consumer her money back if not satisfied. A recent decision from the National Advertising Division (“NAD”) regarding claims Ava Science, Inc. (“Ava”) made in marketing its Ava Ovulation Bracelet (“the Bracelet”) provides some guidance on this marketing device. NAD reviewed Ava’s “one-year pregnancy guarantee” appearing in its social media marketing and website and determined whether, given the context, a consumer would believe this to be a performance or money back guarantee. NAD found that Ava’s website claims could be interpreted, by a potentially vulnerable audience, to overstate the Bracelet’s benefits.
NAD’s decision addressed the guarantee claims as made in two separate circumstances—Ava’s social media marketing and Ava’s website marketing. Of greatest concern to NAD was the guarantee claim on Ava’s website offering a “one-year guarantee of pregnancy*.” Though the guarantee contained a hyperlink disclosing its conditions, the hyperlink did not appear unless a consumer scrolled over the text. Relying on the FTC’s Dot Com Disclosures Guidance, NAD determined that the embedded hyperlink with specific conditions was not sufficiently “clear or conspicuous.” Further, NAD found the website’s “one-year guarantee of pregnancy” was too closely related “to the performance result—pregnancy—and not to the fact that the ‘guarantee’ is about the refund[.]” Ultimately, NAD recommended that Ava modify its website guarantee to make it obvious that terms exist in a separate hyperlink, and to clarify that it is a money-back, not pregnancy, guarantee.
NAD also analyzed the more generalized “1 year guarantee” that appeared on Ava’s social media marketing materials. NAD noted that, standing alone, the guarantee appearing on an image of a “smiling pregnant woman” could convey that Ava is guaranteeing pregnancy, not simply money back. However, because the post accompanying the image stated, “Get pregnant within a year using Ava, or get money back,” NAD found that the terms were “clearly and conspicuously visible” when read in conjunction with the guarantee. In reaching this conclusion, NAD analogized to additional FTC guidance relating to disclosures in Instagram posts, which permits similar disclosures as long as they are made “above the fold,” i.e., without requiring the consumer to click “more.” Ultimately, NAD concluded that the social media post’s short and straight forward terms, read in context with the image, clearly communicated that it was not a performance guarantee.
The NAD decision confirms that context clues are pivotal when making guarantees and disclosing conditions. First, companies should be precise when making money-back versus performance guarantees. A generalized guarantee may only suffice if there is clear accompanying context as to what is being guaranteed. Second, requirements for disclosing conditions to a guarantee are highly dependent on the platform that is being used. On one hand, social media posts should include accompanying text with short, straightforward, and clearly communicated conditions without requiring consumers to click “view more” or “read more.” Website claims should, at the very least, indicate that additional terms and conditions apply and make clear to consumers that a hyperlink to another page detailing those conditions exist.
Finally, companies should be aware that disregarding NAD’s recommendations could come with a price. On March 4, 2020 NAD indicated that it referred Ava’s claims to the FTC for failure to confirm that it would comply with the recommendations. Such a referral could expose a company to a prolonged investigation from—and potentially litigation with—the FTC.