Better Business Bureaus Revise Ad Code for First Time Since 1970s

Social-Media Endorsements, Auto-Renewal Sales Plans and Green Claims Added

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The Council of Better Business Bureaus may be better known for dealing with disputes through its National Advertising Division, but the group's local chapters have long shouldered a far bigger share of such issues. Now, the code that governs those disputes for 112 BBB chapters in the U.S. and Canada is getting its first revision since the 1970s.

Obviously a lot has happened since then, and the newly revised code focuses on such things as social-media endorsements, environmental claims and labels that proclaim products are "Made in the USA" or "Product of Canada." The entire code has been revised to cover the group's six Canadian chapters for the first time.

The impact is far reaching. While the NAD dealt with 140 advertising cases last year, the local chapters dealt with 10,444. That's about the same number of cases as in 2013 but up 16% from 2012, according to Jane Driggs, CEO of the Better Business Bureau of Utah, who was involved in the revision effort.

In most cases, the BBB has followed Federal Trade Commission regulations or guidance on emerging issues, Ms. Driggs said. For example, the new section on endorsements and testimonials follows FTC guidance on clearly disclosing compensation, making clear who is making the endorsement and ensuring the endorsment represents the endorser's current opinions and accurately represents their qualifications, as in the case of physician endorsements.

Another key change is adding a section on "negative option" sales plans, which often occur online and involve people receiving goods or getting automatic renewals of subscriptions unless they opt out.

Complaints about negative-option plans alone number in the thousands annually, Ms. Driggs said, leading the BBB to spell out how advertisers must disclose the full cost, how consumers can cancel to avoid future shipments or renewals and how they can return items they don't want.

On environmental claims, the BBB largely has incorporated the language of the FTC Green Guides, including that environmental "seals of approval" must truly be from legitimate third-party evaluators. On "Made in the USA" claims, the code for the first time incorporates FTC guidelines that "all or virtually all" of the product must have been made in the U.S.

The revised code eliminates the requirement that advertisers include a minimum to a range of savings when an "up to" price-savings claim is made. But in the case of an offer of "up to 40% off," the code retains the requirement that at least 10% of the class of items identified in the ad be offered at 40% off.

The high volume of cases local chapters deal with show that even in the age of online reviews, plenty of ad disputes are still handled by the BBB. Each chapter has a designated advertising specialist. The volume of caes is much higher than 10,000, if complaints handled more informally without a full review were counted, Ms. Driggs said.

The local process isn't as involved as the NAD and tends to deal with simpler issues, she said. "A lowest-price claim is a lowest-price claim," she said. "It's not like saying a toothpaste actually whitens." But she said local chapters, like Utah, may enlist local college faculty to help evaluate scientific claims.

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