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APRIL 2015
ADVERTISING, MARKETING
& PROMOTIONS
>> ALERT
ABA COMMITTEES RECOMMEND WIDESPREAD
CHANGES TO NAD PROCEDURES AND PRACTICES
Two committees of the American Bar Association (ABA) have released a 40 page report recommending
widespread changes to the procedures and practices of the National Advertising Division (NAD) of the
Council of Better Business Bureaus in a stated effort to make the NAD work “even better” than it does today.
BACKGROUND
The report, entitled “Self-Regulation of
Advertising in the United States: An
Assessment of the National Advertising
Division,” was released by the ABA
Section of Antitrust Law’s Advertising
Disputes & Litigation Committee and
Consumer Protection Committee. The
report marks the first time that any ABA
committee has reviewed the NAD’s
Policies and Procedures and made
recommendations for improvements
and changes. However, the report itself
notes that it does “not necessarily
represent the views of the ABA or the
Section of Antitrust Law.”
Members of a working group created in
June 2014 met a number of times over
seven months, dividing their review into
these six categories:
1) History and Mission of the NAD;
2) Bringing a Complaint;
THE BOTTOM LINE
The success of the NAD relies on the voluntary cooperation of its many stakeholders.
Thus, the industry will need to carefully review the report and its recommendations.
Likewise, the NAD will have to consider whether implementing any of the
recommendations will create more or less demand, or more or less voluntary
cooperation. The NAD is too important an institution to make a mistake. The NAD and
its stakeholders need to proceed cautiously or the repercussions could be severe.
The report contains recommendations
on all of these subjects. It also
expresses “strong support for NAD”
and recognizes “the value” and
“success” of the advertising industry
self-regulatory system at the direction
of the NAD. The report concludes
that the system “works well” but finds
“opportunities for increased efficiencies
or improvement.”
Outlined below are the recommendations for change in the report’s six
areas of focus.
3) Presenting the Case;
4) Decision and Press Release;
5) Appeals Process; and
6) Post Review.
HISTORY AND MISSION
With respect to the “History and
Mission” of NAD, the report
recommends that:
1) The funding for the NAD should be
“strengthened,” with the Advertising
Self-Regulation Council (ASRC)
exploring additional funding
sources;
2) The funding for the NAD should be
made “more transparent”; and
3) The NAD attorney who investigates
a prospective case and determines
that a case should be opened
should not be the same attorney
who reviews the evidence, decides
the case and writes the decision.
BRINGING A COMPLAINT
In this category, the report
recommends that:
1) ASRC should clarify the rules
governing the NAD’s jurisdiction,
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APRIL 2015
ADVERTISING, MARKETING & PROMOTIONS
>> ALERT
including which entities are
“advertisers” and whether the
NAD has jurisdiction over claims
made in connection with charitable
solicitation campaigns;
2) ASRC should revisit the page-limit
restrictions for complaints and
briefs;
3) ASRC should revise procedures to
permit, at the NAD’s discretion, a
joint case management conference
between the parties and the NAD to
discuss issues related to length and
format restrictions for briefing and
scheduling issues;
4) The NAD should limit the
scope of its opening letter and its
decision to the claims identified and
“avoid re-characterizing the claims
set forth in the challenger’s
complaint”;
5) The NAD should refrain from
characterizing the closing of a case
in a manner that suggests the
claims were unsubstantiated if the
NAD did not reach the merits of the
case; and
6) Parties should be able to enter into
a private settlement agreement
terminating the case without the
NAD’s approval of the agreement
and without issuance of a press
release.
PRESENTING THE CASE
The recommendations proposing
change in this category are that:
1) The NAD should consider adopting
different tracks, or a tiered
approach, to case management
with unique page limits and
briefing timelines depending on the
complexity and number of claims;
2) The NAD should attempt to
assign a related challenge to the
same attorney handling the initial
challenge (which, as the report
acknowledged, it “already appears
to do in many such cases”);
3) The NAD should revisit its current
expedited review procedures and
consider ways to improve the
process so that it is more frequently
used; and
4) The NAD should explore options
for speeding up the scheduling of
meetings, such as through the use
of videoconferencing.
DECISION AND PRESS RELEASE
In this category, the report
recommends that:
1) The NAD should no longer include
separate statements of each party’s
characterization of the facts but,
rather, should include a “single and
shorter synthesis of relevant facts
that reflects the positions of both
parties, similar to factual recitations
presented in judicial opinions”;
2) If the NAD relies on material
information outside of the record,
the parties should be given an
opportunity to review and respond;
3) ASRC should modernize the online
archive and its search functionality;
4) The NAD should issue decisions “in
a more timely manner” after the final
briefs have been submitted;
5) The advertiser’s statement
should be limited to a statement
indicating whether the advertiser
intends to comply with the NAD’s
recommendation to modify or
discontinue challenged advertising,
not comply, or appeal the decision
to the National Advertising Review
Board (NARB), and that any
statement detailing the reason for
disagreeing should be excluded;
and
6) ASRC should discontinue its current
method of issuing press releases
and instead publicly release case
abstracts or summaries taken from
the NAD decision (except that
press releases should continue to
be used where an advertiser has
refused to participate or to accept
the NAD’s recommendations and
where the NAD has referred the
matter to regulatory agencies or law
enforcement).
APRIL 2015
ADVERTISING, MARKETING & PROMOTIONS
>> ALERT
APPEALS PROCESS
POST-REVIEW
Here, the report recommends that:
In the final category, the report
recommends:
1) The NAD should not be a party to
an appeal to NARB except for
appeals of NAD-initiated cases;
2) Current procedures should be
revised to provide a challenger an
automatic right to appeal to the
NARB;
3) The briefing schedule should be
altered to permit a cross-appellee
a chance to read and respond to
cross-appeal arguments, albeit
without extending the appeal
timeline;
4) New arguments, but not new
evidence, should be accepted in
the NARB appeals;
5) The NARB should review decisions
de novo; and
6) Compliance with the NARB’s
decisions should be enforced by
the chair of the NARB.
1) More time for an advertiser’s
response to a compliance inquiry;
2) Less time for an advertiser’s
response to the NAD’s initial
recommendation and final decision;
3) That advertisers should be allowed
to offer new evidence in support of
a claim that has been found to be
unsubstantiated when “new factors”
have called the underlying decision
into question;
4) That the NAD should consider
allowing an advertiser to petition
the NARB chair for permission to
appeal a compliance ruling in
exceptional circumstances;
5) That although the Federal Trade
Commission (FTC) referral process
generally should remain as is,
“efforts should be made to improve
access to information concerning
NAD referrals and closing letters”;
and
6) That the NAD should not comment
on claims that an advertiser decides
to withdraw after a challenge is filed.
FOR MORE INFORMATION
Ronald R. Urbach
Chairman/Co-Chair
212.468.4824
[email protected]
Aaron Taylor
Associate
212.468.4984
[email protected]
or the D&G attorney with whom you
have regular contact.
Davis & Gilbert LLP
212.468.4800
1740 Broadway, New York, NY 10019
www.dglaw.com
© 2015 Davis & Gilbert LLP