The National Advertising Division

By Author: Kevin Garnnet
Total Articles: 24
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The National Advertising Division (NAD) of the Better Business Bureau is industry's main mechanism for policing its own advertising. The self-regulatory program of the NAD was established in 1971 "to help sustain high standards of truth and accuracy in national advertising." In 1974, the Council of Better Business Bureaus added the Children's Advertising Review Unit (CARU) to address ads targeted at kids.

The NAD reviews all charges of deception Cartier Replica in advertising brought by consumers and manufacturers or submitted by local Better Business Bureaus. The NAD also monitors advertising on its own.

The NAD's own monitoring is one source of complaints. The organization reports that it "conducts systematic monitoring of national broadcast and cable television and print advertising, and begins certain cases on its own initiative based on this in-house review. In recent years, approximately 20 percent of cases have originated from consumers and BBBs, 50 percent from competing advertisers and 30 percent from NAD's monitoring program." ...
... Information released by the NAD indicates that 96 of the 100 leading advertisers have participated voluntarily in the NAD review process-- as either advertisers or complainants.

The NAD evaluates all complaints received. If it concludes that an ad violates good advertising practices or contains falsehoods or inaccuracies, the NAD tries to persuade the advertiser to change or drop the ad. If the advertiser and the NAD cannot reach agreement at this level, either may appeal the case to the National Advertising Review Board (NARB). A panel drawn from the seventy-member NARB serves as a court of appeal at this stage, and a public member sits on each review panel.

The NARB members employed by a company that manufactures or sells the product being evaluated or a competing product may not serve on a review panel. Similarly, advertisers who represent a competing product are disqualified from serving on such review panels.

Figure 8.1 details the review and appeals process. Note that if the matter cannot be resolved by the NARB panel and the advertiser, the case can be referred to the FTC for further action. The industry would clearly prefer to resolve its own differences and respond to consumer dissatisfaction without government intervention. Indeed, the NAD and the NARB were created to forestall restrictive legislation. Only 3 percent of the 3,200 cases reviewed in this process since the NAD's founding in 1971 have been forwarded to the FTC.

The case against Slim America illustrates this process at work. In 1996, the NAD and the NARB both concluded that Slim America could not substantiate the weight-loss claims it made for its product. The NARB recommended discontinuation of the advertising. Slim America refused. The NARB referred the case to the FTC. At the trial, the NAD served as an expert witness. On July 19, 1999, the U.S. District Court for the Southern District of Florida ordered the president of Slim America to discontinue the company's deceptive ads, pay $8.3 million in penalties, and post a $5.0 mil-lion performance bond before the company engaged in "any business related to weight-loss products or services." After the judgment was announced, the Better Tag Heuer Carrera Replica Business Bureau put out a press release on 30 July with the headline "FTC Victory Confirms NAD and NARB Decisions in Judgment against Slim America."

In summer 1995, the NAD announced that it would begin monitoring advertising that appears online. NAD asked online services to provide it with cost-free access to the television networks and the Internet. Consumers and competitors can contact the NAD directly with complaints about Net or non-Net ads. In a twist that acknowledges the growing importance of computer sites, the NAD now will also take complaints through e-mail or through the Better Business Bureau's Web site.

Like many self-regulatory moves, this one was inspired by discussions in Congress about regulating what appears online. "NAD will be better than the government at regulating the Internet;" said American Advertising Federation president Wally Snyder, "because they [NAD] can offer a service that is quicker, less costly, and voluntary."

Critics of this self-regulatory procedure point out that it is a post hoc mechanism: no action can be taken until a violation occurs. Industry defenders respond that the outcomes of previous cases clearly show advertisers what sorts of tactics to avoid. One side argues that asking the industry to police itself is like asking the fox to guard the chicken coop; the other side responds that a member of the public now sits on all the NARB review panels and that the number of findings against advertisers attests that this procedure is not a sham. Critics charge that the NAD/NARB procedure has no mechanism for meting out punishment or for correcting false impressions already created. Defenders concede this point but argue that U.S. antitrust laws make it difficult for the board or the panels to levy punishments.