Lawyers Recommend Slew of Changes to Advertising Self-Regulation

Many of the Proposed Changes Are Simple, but at Least One Would be Hard to Pass

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Attorneys who practice before the National Advertising Division released long-awaited recommendations on how advertisers could improve their self-policing system Wednesday, a list of ideas that ranged from investing more money in the process to allowing disputes to be settled privately.

The 59 attorneys from the American Bar Association's anti-trust subcommittee involved in the review present some of the nation's largest advertisers, including Sprint, General Mills and Johnson & Johnson Overall, the 51-page report, "Self-Regulation of Advertising in the United States: An Assessment of the National Advertising Division," concluded "the system works well." But the group did find areas for improvement, though they were not unanimous in their approval of all of the recommendations.

The recommendations ranged from those that could be adopted fairly easily, including one that suggested the NAD assign challenges that touch on similar issues to the same attorney, to those that would be far more difficult -- and perhaps controversial -- to implement.

According to John Villafranco, a partner in Kelley Drye & Warren who led the review effort, the toughest proposal for the NAD to accept is the recommendation advertisers be able to settle their differences privately, ending a case brought before the NAD without having to seek the division's approval of a written settlement agreement and without issuance of a press release (which might dampen ensuing media coverage).

"I think they'll consider it, but it's an example of a proposal that will be more controversial," he said.

Whether any changes will be made to a decade's old process will be decided by the Advertising Self-Regulatory Council, which declined to comment on specific suggestions.

"This in-depth evaluation by regular users of the self-regulatory system has provided us with invaluable feedback. We're grateful for these insights and we intend to carefully consider each recommendation," said Advertising Self-Regulation Council President C. Lee Peeler.

Funding of the process was one area "where there might be opportunities for increased efficiencies or improvement," the report said. It recommended requiring better disclosure of how funds for the NAD are allocated and for the Advertising Self-Regulation Council to explore additional funding sources. Direct contributions to NAD and higher filing fees for expedited cases were cited as possible ways to increase funding.

"That's the most important recommendation," said Mr. Villafranco.

Mr. Villafranco said the time it takes to make a decision has grown from about 15 days when the self-regulation process was established in 1971 to three or four months because there are only seven attorneys handling all of the cases.

"That is the biggest factor in the length of time it takes to get a decision," he said.

The report suggested NAD revisit its current expedited review procedures and consider alternatives, including limiting the number of pages in submissions as well as the number of witness statements -- and charging higher filing fees.

Other recommendations include:

  • the ASRC clarify rules governing NAD's jurisdiction, including which entities are properly considered "advertisers," and whether NAD has jurisdiction over claims made in connection with charitable solicitation campaigns.
  • the NAD accept new evidence if a situation changes after a decision has been made, in effect reopening the case.
  • current procedures be revised to provide the challenger an automatic right to appeal to the National Advertising Review Board
  • to conserve resources, the ASRC should discontinue its current method of issuing press releases and instead only release case abstracts or summaries taken from the NAD decision. Press releases would continue to be released in cases where an advertiser has refused to participate or to accept NAD's recommendations and the case has been referred to federal regulatory agencies or law enforcement.

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