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Spring 2021 Edition: Not a Symposium, but a Virtual Ad Law CLE Bonanza

In a recent series of webinars, members of Venable’s advertising law practice, Reed Freeman, Len Gordon, and Shahin Rothermel, along with some leading industry figures, explored and addressed key issues of concern to companies in the advertising space.

Our attorneys along with Panelists Mary Engle and Laura Brett from BBB National Programs, which administers the National Advertising Division (NAD), the investigative unit of the industry’s system of self-regulation; Lou Mastria from the Digital Advertising Alliance (DAA); and Daniel Kaufman from the Federal Trade Commission (FTC) also answered some audience questions. Below are some highlights from each session.

Session #1: NAD at 50 Years: Regulation and Self-Regulation Over the Past 50 Years

Q: To what extent does the NAD support the work of the FTC in enforcing self-regulation?

A: There has always been a strong relationship between the FTC and the NAD in supporting self-regulation. The FTC has limited resources, and it considers the NAD to be another cop on the street. There are always going to be cases that the FTC will want to pursue, regardless—for example, when it’s important to get money back to consumers. But anytime the NAD can define advertising as misleading and cause an advertiser to modify or discontinue the advertising, it frees up resources for the FTC. To show its support, the FTC prioritizes referrals from the NAD (as opposed to letters from competitors sent directly to the FTC). Similarly, after cases are referred to the FTC, it encourages the advertiser to participate in the NAD process and comply with the NAD’s decisions. So broadly speaking, the FTC really believes in the NAD’s role in encouraging self-regulation and in promoting truthful and non-misleading advertising.

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Continue Reading You Asked. We Answered.

We’re sorry not to be meeting up with you in person, but we hope you can join us for our spring 2021 edition of “Not a Symposium, but a Virtual Ad Law CLE Bonanza.” Combining the experience and thought leadership of one of the nation’s largest advertising law practices with key figures in advertising regulation, these three CLE-packed sessions are designed to educate and innovate. Topics will cover broad trends and anticipated developments, as well as industry-specific hurdles, highlights, and more.

Register today for any or all sessions!

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Continue Reading Spring 2021 Edition: Not a Symposium, but a Virtual Ad Law CLE Bonanza

Earlier this month, NAD issued its first decision under its Fast-Track SWIFT program, its expedited review track for single well-defined advertising issues. (Here are more details on NAD’s Fast-Track SWIFT program.) In its first substantive Fast-Track SWIFT decision, NAD dealt with a dispute between energy bar manufacturers Kind and Clif and reviewed the claim “A Better Performing Bar–Clif Bar For Sustained Energy,” which appeared as the top AdWords result for internet keyword searches for “Kind Bars” and “energy bars.”

Kind argued that this constitutes an express claim comparing the performance of Clif Energy Bars (either generally or with respect to sustained energy) to the performance of Kind Bars or all energy bars on the market, that must be supported by head-to-head product testing. Clif argued that the claim was not appropriate for SWIFT treatment because the challenged claim was too complex. Specifically, Clif argued that expert testimony and a consumer perception survey were necessary to determine whether the word “better” conveyed a comparative performance message or was merely an expression of the advertiser’s opinion of its product, and that these questions could not be obtained within the shortened SWIFT timeline. NAD concluded that the claims were appropriate for SWIFT treatment because they did not require NAD to evaluate complicated product testing (the advertiser did not argue that it had product testing to support a comparative performance claim), and any legal arguments were limited because the challenge involved a single claim in a single context.

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Continue Reading NAD Issues First Decision under Fast-Track SWIFT Program

Two recent decisions by the National Advertising Division (NAD) provide a helpful reminder to companies that material connections must be disclosed on their seemingly independent websites — so-called native advertisements. Notably, one of the cases arose from the NAD’s routine monitoring program, but both serve as a good reminder that without proper disclosures, consumers may…

Last month, the National Advertising Division (NAD) launched its much-anticipated NAD Fast-Track SWIFT process (“Single Well-defined Issue Fast Track”). As we blogged previously, the Fast-Track SWIFT program reflects NAD’s plans to resolve advertising disputes more quickly and efficiently. The most significant aspect of Fast-Track SWIFT is its expeditious resolution process. Parties receive a NAD decision within 20 business days from the initiation of a challenge, i.e., the time that the advertiser receives the challenge.

Under the new rules, any person or entity may seek Fast-Track SWIFT review, but the Fast-Track SWIFT process is limited to issues in national advertising that do not require complex substantiation, such as clinical or technical testing or consumer perception evidence. Specifically, only the following three types of claims are eligible for fast-track review: the prominence or sufficiency of disclosures; misleading pricing and sales claims; and misleading express claims that do not require review of complex evidence or substantiation. NAD also provides hypothetical case examples it might find appropriate for fast-track determination.

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Continue Reading NAD Launches Fast-Track SWIFT Process

A recent decision from the National Advertising Division (“NAD”) regarding claims made by SmileDirectClub, LLC (“SDC”) in online advertising for its Smile Direct Club Clear Aligners provides guidance on a variety of key advertising issues, including comparative and savings claims, guarantees and consumer reviews and testimonials. NAD recommended the modification or discontinuation of many of the claims challenged by Align Technology, Inc. (“Align”), maker of Invisalign clear aligners.

First, Align argued that SDC’s advertising misled consumers by claiming that its products and services provide smile correction for the same severity levels, or for a comparable range, as Invisalign. According to the challenger, claims such as “SmileDirectClub invisible aligners straighten most smiles in an average of 6 months” conveyed a message that SDC can fix most teeth issues, including complex conditions, without proper disclosure that SDC’s product is actually intended to treat milder and less complex cases of teeth malocclusion.

In recommending that the advertiser modify its claim by disclosing its limitation to mild-to-moderate malocclusion cases, NAD explained that “[a]dvertisers are free to make ‘apples-to-oranges’ comparisons in order to highlight features or attributes of their products, provided that the advertiser disclose the material differences between the products being compared.”

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Continue Reading Something to Smile About: NAD Provides Guidance on Key Claim Substantiation Issues in Recent Decision

Recently the National Advertising Division (NAD), as part of its routine monitoring program, evaluated whether certain claims made by Petco Animal Supplies, Inc. (Petco) in marketing and advertising materials for its “no artificial ingredients” advertising campaign were adequately substantiated. The NAD determined that Petco presented sufficient evidence to demonstrate that it is “setting a bold new standard for nutrition” and that it “will continue to evaluate and evolve [its] standards and assortment to take pet nutrition to new levels.” However, it recommended that Petco modify certain claims that it was removing “all” artificial ingredients or that there would be “no more artificials” in any of the pet food or treats it carries. The case provides some important guidance on the rules for making claims regarding “no artificial ingredients.”

Petco launched an initiative to remove artificial ingredients from its dog and cat foods and marketed that initiative heavily. Petco had adopted definitions of “Artificial Flavor,” “Artificial Color,” and “Artificial Preservative” that mimicked the FDA’s definitions and language, and expressly disclosed to consumers its definitions of these terms. Specifically, Petco disclosed that its definition of “artificial ingredients” did not include “synthetic vitamins, minerals and amino acids,” “substances that are derivatives or mimics of national compounds,” and “substances that may fall into categories outside the Petco definition of artificial colors.”

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Continue Reading Make No Bones About It: NAD Finds Petco Is “Setting a Bold New Standard for Nutrition” but Recommends “No Artificials” and “Better Nutrition” Claims Should Be Discontinued

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.

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Continue Reading Context is Key: NAD Examines Ava Fertility Bracelet Guarantee Claims

In formulating a health and safety-related claim, advertisers walk a fine line in accurately conveying the results of reliably conducted studies to support their claims. Disclaimers and other qualifying language are limited tools advertisers can use to mitigate the risk of a claims challenge. But as a recent NAD decision shows, just because a study is reliably conducted, does not necessarily mean it is a good fit to support an advertising claim. Thus, basing a claim on a reliably conducted study can still be held to be misleading if the study results do not closely reflect what the average consumer could realistically expect to achieve. What’s more, this recent decision reminds advertisers that a lengthy disclosure may not be sufficient when it fails to disclose a wide variability in observed study results.

On February 25, 2020, the National Advertising Division (NAD) issued a decision and recommendation that Trek Bikes discontinue use of the claim that its WaveCel helmet is “up to 48x more effective than traditional foam helmets in protecting your head from injuries caused by certain cycling accidents.” Although the cited “Bliven Study” demonstrated that the WaveCel helmet in fact outperformed traditional foam helmets for head injury protection in all impact scenarios, the NAD was concerned the claim conveyed the implied message that “People who use the WaveCel Helmet will have little to no risk of experiencing a concussion.”

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Continue Reading Heads Up! NAD Recommends Discontinuing WaveCel Safety Claim

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…