When advertisers have a problem with a competitor's claims, they don't have to go to court. They can turn to the National Advertising Division of the Council of Better Business Bureaus, a self-regulating body established in 1971 to deal with false or misleading advertising claims. The NAD can also file a challenge against an advertiser on its own.
In 2010, the NAD handled 145 cases and has handled thousands over the years for some of the biggest brands out there. "The NAD is applying the most important principles of advertising law and serve a consumer-protection function," said Terri Seligman, an attorney at Frankfurt, Kurnit, Klein & Selz who often handles NAD cases. "It's in everyone's interest that advertisers don't lie."
More than 90% of advertisers comply with NAD decisions since failure to do so can result in government action. And advertising is everywhere. NAD spokesperson Linda Bean said the NAD has reviewed advertising claims that were made in product placement (inserted into the dialogue of a TV show or a movie), claims made in YouTube videos, in blog postings and in press releases. So now you know.
Below, a few rules established by NAD precedent.
FACEBOOK AND YOUR TWITTER COUNT
People can generally say whatever they want on their Facebook page and Twitter stream. But not advertisers. In July 2010, the NAD recommended that the Liquid HCG Diet product discontinue its weight-loss claims in electronic advertising, specifically pointing out Twitter and Facebook in the decision. The NAD also asked that HCG modify its consumer testimonials. It's no wonder the NAD felt inclined to do so -- a quick check of the HCG Diet Facebook page shows it has more than 62,000 likes. In comparison, Nutrisystem has about 11,000 and Jenny Craig about 25,000.
A RE-ENACTMENT MUST DEPICT REAL STUFF
Deciding on a 1997 case about window-and-patio-door-manufacturer Andersen Corp., the NAD ruled that advertisements featuring re-enactments of unusual but actual consumer experiences may be dramatized or fictionalized, but must accurately portray how the product performed under the circumstances depicted. So your re-enactment can still misrepresent the hotness of the housewife in the scenario, just not the product she uses.
COMEDY IS NO EXCUSE
Just because it's funny doesn't mean there isn't a serious claim being made that has to be substantiated. In 2006, the NAD concluded that the crash demonstration in the Mercedes-Benz GL commercial overstated the actual crash-resistance and safety performance of the car and recommended that the commercials be modified. The commercial showed another vehicle crashing into the Mercedes and bouncing off it, with no damage to the Mercedes.
MY DOG IS BIGGER THAN A DINOSAUR
A few cases helped the NAD and the industry put their finger on the elusive definition of puffery. Puffery is allowed. If something is deemed puffery, it doesn't have to be proved, it can just be said. But it gets tricky. For example when Gorilla Glue said its glue was the "toughest glue on planet Earth," which sounds like puffery, the NAD ruled in 2006 that it was indeed a claim that had to be proved. On the other hand, a statement by Yahoo Personals was challenged by Match.com that same year, and the NAD decided that while a standalone statement of "Better First Dates" is puffery (because a "better" date is subjective), it's an advertising claim needing substantiation when it's combined with "More Second Dates" because it would have to show the numbers.
NATURAL AS NATURE
In 1998, the NAD recommended that Tom's of Maine avoid claiming that its Natural Mouthwash is 100% or completely natural and include in advertising that the product contains an ingredient that is not inherently "natural" or sourced from nature. Attempts to find this ingredient were futile, but the case made its point. Following that case, the NAD had to basically go through the thesaurus of adjectives relating to claims of nature and insist to companies that if they say their product is "biodegradable" -- like Clorox did with its Green Works Natural Cleaning Wipes -- it actually has to degrade. Last year, even Whole Foods favorite Seventh Generation was told to discontinue or modify various safety and "natural" claims.
SALE MATERIALS AND INSTRUCTIONS ARE ADS, TOO
A couple of cases helped the NAD draw the line between commercial and noncommercial speech. Last year, the NAD told Smart Technologies that the marketing materials included with its whiteboards directed to sales personnel to "educate" them count as national advertising and therefore must be substantiated just like any kind of ad. And in 2007, the NAD told Dyson that it couldn't hide behind an "instructional" ad on YouTube -- the video depicted a comparative product demonstration, and the NAD deemed it advertising.
WHAT'S IN A NAME: A CLAIM!
A 2007 case regarding Bayer's "One-a-Day All-Day Energy" showed that advertisers can't hide unsubstantiated claims behind the commercial name of the product. Wyeth brought the challenge to NAD and won. Bayer appealed the ruling, saying that it wanted to continue to use "All-Day" because, it argued, consumers didn't expect that to be a measure of time since they expect product names to be hyperbolic. But the appeal was declined and that "All-Day" is a provable statement as a duration of time. In a 2002 case, the NAD did not require an advertiser to discontinue use of a product named "Never Snore" since it was obvious that a product cannot prevent anyone from ever snoring again.
GREEN AS IN NATURE
It's not easy to get to Steve Jobs, but in 2009 the NAD told Mr. Jobs -- after a challenge by Dell -- that Apple cannot claim its MacBook was the greenest family of notebooks. Nice try, though, since claiming "green" is a good way to get consumers to pay more for your product. The MacBooks had less packaging and used some recycled materials, but the NAD ruled that the harmful effects of manufacturing the product as well as the multitude of chemicals, solvents and polymers can in no way be deemed "green." Amazingly, that wasn't the first electronic product to claim to be good for the environment. In 2007, the NAD recommended that Panasonic Corp. of North America discontinue advertising that its TVs were "environmentally friendly." Another important case ruling by the NAD involved the Ziploc Evolve bags. Ziploc was told by the NAD that claims that "wind energy" was used in the manufacture of the bags had to be specified because it was only partially used. Since that time, rules for marketers of green products have become much clearer. A good read are the FTC Green Guides at ftc.gov.
EVEN CARTOON BEARS MUST BE HONEST
The Charmin Ultra Bears case, decided last year, established that product demonstrations must accurately show a product's performance, characteristics or features -- even if it's a cartoon demonstration. Much to the chagrin of Procter & Gamble and to the amusement of challenger and rival Kimberly-Clark Corp -- as well as the press -- the NAD decided that the animated demonstration of a Charmin Bear using toilet paper overstated extent of product superiority and did not accurately reflect consumer-testing results. Therefore, the Charmin Bears, which first appeared for the P&G brand in 2000, must prominently display at least a few specs of cartoon toilet paper on their rears to accurately reflect that Charmin leaves fewer pieces behind, but not no pieces behind.