United States: End Of An Era At NAD?

Last Updated: July 12 2017
Article by Terri J. Seligman and Hannah Taylor

Last week Frankfurt Kurnit's Advertising Group proudly hosted "A Twenty-Year NAD Retrospective: The Levine Legacy," an ABA program honoring Andrea Levine, on the occasion of her retirement as Director of NAD. Ms. Levine spent 20 years at NAD building it into the preeminent forum for resolving advertising disputes quickly and cost-effectively. She and her staff made this self-regulatory forum into a highly respected arbiter of advertising claims and in the process produced a treasure trove of advertising "law" through their thousands of case decisions.

With NAD transitioning to new (as yet unnamed) leadership, we thought it would be a good time to review some of the best practices that guide NAD practitioners every day.

1. NAD is Different.

An NAD proceeding is not litigation in court. There is no discovery. There are no motions, no damages, and no sanctions. There is no publicity until a press release is issued by NAD at the conclusion of the matter. Advocacy is important. But the gamesmanship litigators sometimes deploy in a court proceeding is not particularly effective or, indeed, welcome at NAD. Whether you are representing the advertiser or the challenger, you should go directly to the substance of the case: Is the advertising truthful? Are the claims adequately supported? What is the consumer takeaway? Your job as advocate is to marshal the facts and present your arguments. But, ultimately, NAD's own view of the claims made in the ads is more important than what any lawyer says about them.

2. Read the Case Reports.

Searchable NAD Case Reports are available by subscription on the NAD website. If you represent advertisers, start reading them now before you're involved in a case. This is where much of the body of advertising law resides. Use the Case Reports to counsel clients, to understand potential pitfalls of your claims, and to understand what type of substantiation you'll need for those claims.

When citing NAD's cases in your papers, understand that, while helpful, precedent is rarely dispositive because each ad is different. Unlike in court proceedings, adherence to precedent is not a guiding principle in NAD proceedings. NAD can be more concerned with the impression created by the advertising at issue than adhering to its own precedent.

3. The More "Impactful" the Claim, the More and Better Substantiation NAD Will Want.

If you read a lot of NAD Case Reports, you will notice several things about NAD's approach to substantiation. First, the more serious the claim, e.g., claims that involve health, or babies, or social responsibility, or claims for products or services that require a significant expenditure of money, the more substantiation NAD will want. Second, the more compelling the claim itself, no matter the product category, the more substantiation NAD will want. Ultimately, what NAD wants to see is a "good fit" (an expression frequently used by NAD) between the support and the claim. For example, don't try to support a claim about the health benefits of a product with one small study about the individual ingredients; you'll likely need at least one robust study of the product itself.

4. Humor is Good, But It Won't Save You If the Claim is Unduly Disparaging or Not Truthful.

Humor does not equal puffery. The claim expressed humorously must still be truthful. You might have some license to exaggerate if it's clear that the exaggeration is over-the-top, but you can't overstate benefits in a way that would lead consumers to expect to receive them. Likewise, don't trash your competitors. Use humor to highlight and entertain but not to lie or denigrate. For example, in a case involving PUR water filter pitchers, the challenged advertising featured "Arthur Tweedie," a fictional and over-the-top "water critic". Mr. Tweedie had effusive praise for the PUR pitcher, which "reduces 14 contaminants," but was visibly disappointed at the competitor's water filter pitcher he evaluated, which he stated "reduces only 6 contaminants." During the course of his "review," Mr. Tweedie lost control and snapped his glasses in half, saying: "Oooh! Perhaps I should only use half my spectacles!" In its Decision, NAD expressed concern that when Tweedie compared the competitor's pitcher to half a pair of glasses, a consumer could reasonably take away the false message that reducing half the contaminants provides little or no value to consumers, like half of a pair of glasses. The fact that PUR used a silly mechanism to make such claims did not change the analysis. NAD recommended that the advertiser discontinue or modify the advertising.

5. Claims and Their Substantiation Must Be Consumer-Relevant.

It is a "black letter" principle of advertising law that a claim can be truthful but still misleading. One of Andrea Levine's favorite examples of this principle was from a case where the advertiser touted that its chocolate chip cookies contained twice the number of chips as its competitor. This was a literally true claim; however, the chips were half the size of the competitors' chips. So, the implied claim, that there was twice the chocolate in the advertiser's cookies, was false.

Testing, like claims, must also be consumer-relevant. Thus, testing should recreate real world conditions. If testing a household grease remover, you need studies showing the product removes the kind of grease a consumer would actually confront in his or her own kitchen.

6. Consider a Survey.

You don't have to offer a consumer perception survey in an NAD proceeding. NAD can and will evaluate an ad's takeaway without one. But there may be circumstances when a survey is helpful — for example, when the takeaway is ambiguous and you're not confident that NAD will see the claim the way you do, or when the claim is not ambiguous but you want to give NAD a ground to buttress its own decision. Commissioning a consumer perception survey will increase your costs, but in such circumstances, it may be worth it.

If you decide to use a survey, make sure it is properly designed and conducted. NAD prefers open-ended questions ("what was the main message of the commercial?") and will want to see the verbatims (the actual responses provided to those open-ended questions). If using close-ended questions (questions that can be answered with a simple yes or no or a specific response), they shouldn't be leading. The order of questions is very important because of the potential to focus respondents' attention on certain attributes. You also need to be careful of fatigue risk. So keep surveys short and to the point, and use an experienced survey expert to prepare and field it.

Note that even if you use a well-designed survey, NAD is not bound by it. As NAD has noted in several cases, "it is well settled that in evaluating the reasonable messages conveyed by a commercial, NAD need not limit itself to the results of consumer perception surveys submitted by the parties but may also independently examine the contested advertising and carefully consider its net impression."

7. Consider Expediting the Case.

If you're the challenger and the advertiser puts in a superficial response to your challenge letter, you can speed things along by waiving your right to submit a reply. The waiver forecloses the advertiser from putting in additional papers and NAD will issue a decision based just on the initial papers (and, of course, its own impressions of the advertising materials). Remember, then, that if you're the advertiser, you shouldn't try to game the system by holding back arguments for your second letter because you may never get the chance to submit a second letter. Therefore, whether you're the advertiser or the challenger, your initial papers should be thorough.

8. Remember "Routine Monitoring."

NAD has a consumer protection role in addition to its role of adjudicating disputes between competitors. You may be in an industry where companies don't often challenge each other, but NAD may be watching anyway, and NAD may call you to task. Areas where NAD often engages in "routine monitoring": too-good-to-be true claims; green and other social responsibility claims (where claims are impactful and consumers are not in a good position to evaluate the claims for themselves); and aggressive and impactful claims in industries where there's little likelihood of challenges between advertisers because all the companies are making the same kind of claims.

9. Ignore the NAD at Your Peril.

Participating in an NAD proceeding is voluntary, but there are consequences for advertisers who choose not to participate or choose not to comply with an NAD decision. NAD can and does refer cases to the FTC and those cases are said to go "to the top of the pile." Although it is likely that the cases FTC chooses to pursue in the coming years will change, it is also likely that FTC will continue to support self-regulation and take referrals from NAD seriously.

10. NAD Lawyers Like Their Jobs.

NAD staff comprises experienced lawyers, many of whom seem to really like working at NAD. Remember that if you practice regularly before NAD, you'll probably work with the same NAD lawyers on multiple matters. So behave well and establish a good reputation there!


This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.

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Terri J. Seligman
Hannah Taylor
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