Although we’ve seen a steady stream of litigation in recent years focusing on how companies advertise sales, sales haven’t been a hot topic in NAD cases. Last week, however, NAD announced a decision involving Guardian Bikes’ sale practices. Notably, the case was initiated by NAD itself, rather than a competitor, suggesting that we may see more of these cases in the future.
NAD’s inquiry focused on claims such as “40% OFF All Bikes,” “You’ve Got 40% OFF,” and “Sale Ends In” followed by a countdown timer. NAD also reviewed strike-through pricing that compared a current price to a higher reference price. Guardian’s bikes were generally advertised at prices that were roughly 40% below a “Comparable Value” benchmark derived from competitor pricing, rather than 40% below Guardian’s own former prices.
One issue was whether consumers would reasonably interpret the ads to mean that Guardian was temporarily discounting its bikes by 40% from its regular selling prices. NAD was concerned that consumers could take away that message, particularly when the ads paired “40% off” savings claims with limited-time sale language and countdown timers.
NAD’s concern was amplified by a Memorial Day promotion during which consumers could get free accessories with the purchase of a bike. NAD noted that the bike prices appeared to remain at Guardian’s everyday prices while the limited-time offer related only to the accessory bundle. Nevertheless, messages such as “40% off” plus “free accessories” could create the impression that the discount was also temporary.
NAD was also troubled by the use of consecutive countdown timers that appeared to promote the same offer over an extended period. According to the decision, Guardian used back-to-back countdown clocks during the promotion, creating a continuing sense that the sale was about to end. NAD questioned whether that approach could communicate an unsupported sense of urgency.
Guardian voluntarily agreed to modify its practices. Among other changes, it agreed to clarify that its “40% off” messaging reflects an everyday comparison to competitor pricing, not a temporary markdown from Guardian’s own regular prices. It also agreed to better distinguish limited-time promotions from its ongoing comparable-value pricing model and to ensure that countdown timers clearly identify the promotion being offered. NAD treated those modifications as though they had been formally recommended and accepted.
For marketers, the takeaway is straightforward: if your “sale” price is really your everyday price, be careful how you describe it. And if a countdown timer is counting down to an offer that looks a lot like the one that expired yesterday, NAD may start asking whether consumers are really getting a limited-time deal or just a limited-time illusion. The consequences could be worse if a plaintiffs’ attorney, rather than NAD, asks those questions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]