Perhaps you've noticed that many advertisements make bold claims about the products they're hawking. Claims like: New. Improved. More. Best.
Can you trust these claims? Do they have any real meaning? How "new" must a product be to term itself so? When can an item be fairly described as "on sale"?
It turns out there's an entire organization devoted to pondering these vitally important questions. Back in 1971—at the height of Nader-ite consumer activism—the advertising industry realized it needed to provide some form of assurance that ads were truthful and accurate. Thus was born the National Advertising Division of the Council of Better Business Bureaus.
Curious about the work the NAD does, I recently spoke with its director, Andrea Levine. Levine sometimes picks an ad to review after seeing it on TV. ("I've found a lot of cases getting dressed in the morning, watching the news," she says.) But the bulk of the NAD's cases are disputes between two rival brands. Generally, competing companies are more likely than consumers to notice when an ad makes a false claim.
If you air an ad that exaggerates your toothpaste's effectiveness, you can bet that a rival toothpaste brand will call you out on your lies. Likewise, if you make an ad that slags a competitor's product—and does so in a demonstrably unfair or misleading manner—you can be sure that your competitor won't take it lightly. In both cases, you'll get dragged before the NAD.
It's amazing how tiny details can spur major arguments. Perusing the after-action reports from NAD's cases turns up a wealth of wonderfully petty disagreements. Dyson challenges Oreck's claim that a vacuum "reduced up to 99.9 percent of bacteria in laboratory testing." Cepacol challenges Chloraseptic's claim that it's "the strongest medicine you can get without a prescription." Dell challenges Apple's claim that the new MacBooks are "the world's greenest family of notebooks."
About 200-300 disputes like this get adjudicated each year. When an ad is brought to their attention, the NAD's lawyers review the specific claims at issue. The rule is that the advertiser must have substantiated any claims before the ad was put on the air, so the NAD will first ask for any substantiating materials the advertiser can provide. If the NAD lawyers determine that the claims aren't valid, they'll recommend that the ad be altered. The compliance rate on this is more than 95 percent. But if the advertiser refuses to modify the ad (this is a voluntary, self-regulating body, not a court of law), the NAD will refer the matter to the Federal Trade Commission. One such FTC referral resulted in an $83 million judgment against a weight-loss company.
In the course of its more than 5,000 decisions to date, the NAD has developed a few basic guidelines for common claims. For instance, to call your product "new and improved," you must show a substantial and measurable improvement, and you can only make the claim for a six-month period. (Any longer than that and the improvement's not new anymore.) To claim that a product is "on sale," you have to demonstrate that for at least half the year, you offered the product at a nonsale price. And this nonsale price must be in itself a reasonable and good faith amount. (You can't first pretend to charge a ridiculous price and then reduce it to a normal level and call it a "sale.") What if you want to claim that you're offering "up to half off" on items in your store? Any "up to" claim must apply to at least 10 percent of your inventory. (It's not valid if you sell a single product at half off—and the other 800 products at full price.)
Other claims are less straightforward. "Sometimes you can say something completely truthful and still be misleading," Levine points out. "One chocolate-chip muffin mix was claiming it had 50 percent more chips than its competitors. Which was true. But they were itty-bitty chips. When we weighed them, we found out that the one with more chips actually had less chocolate. This was very upsetting. You can't lie about chocolate!"
Grayer areas of advertising can also come under the NAD's watchful eye. One online dating site paid for product placement in several episodes of a sitcom. The first episode's dialogue included a character making a performance claim about the dating site. The NAD ruled that the claim had to be dialed back in subsequent episodes. Because the NAD makes it a point to move quickly—the target turnaround time is 90 days or fewer—most decisions come into play while the ad or product placement being reviewed is still on the air.
I find it surprisingly reassuring that someone out there is making sure this stuff is on the level. "When a major brand makes a claim," says Levine, "consumers can feel comfortable that it's been vetted. If it isn't truthful or accurate, it will end up in our office pretty fast. Competitors will bring it to our attention." The lone exception: industries where every brand's interest is to lie. When it comes to things like weight loss and hair loss, it's less likely one sham product will call out another, so NAD is forced to take more of the burden on itself.
I say burden, but in fact it sounds like an amazingly fun job. NAD lawyers study the minutiae of every product brought before them. "It's fascinating," says Levine. "One day we're talking to the world's foremost authority on calcium. The next day we're figuring out what makes people's feet stink. The day after that, we're sticking forks in bowls of chili to see if they actually stay standing up. You should come by our office—we'll try to have you in when we've just received a case of vodka to test, instead of a case of feminine hygiene products."
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