Consumer Advertising Law Blog

UK Invasion of NAD: Challenge to Photo Enhanced Cover Girl Ad

I think we can agree that photo shopping in print ads does not help boost the self esteem of women of all ages.  But is it misleading? 

The National Advertising Division brought a monitoring case against P&G's Cover Girl mascara ads featuring Taylor Swift. (This is a challenge to ad substantiation not brought by the typical competitor challenger, but by the NAD itself as part of its own review of advertising.). The ad claimed the mascara would provide 2x more volume (than bare lashes) and was 20% lighter (than the most expensive mascara). The NAD's beef was not with these claims, but with the batting eye photo of the lovely young country cross over star. NAD requested substantiation for implied claims that consumers who use the product will get lashes like those depicted in the photo and that the lashes in the photo were achieved solely by using the mascara. It is well established that claims can be modified with appropriate, clear and conspicuous disclaimers. Product demonstrations on the other hand, have been challenged as far back as Rapid Shave and Campbell’s Soup when the demonstration has been enhanced. However, in this case, P&G presumably accurately stated the product’s benefits - 2x more volume and 20% lighter. If so, does it matter then that P&G also may have enhanced what those benefits looked like on a particular individual, in this case the lovely Ms. Swift?  And should it matter that they also fessed up to it in the form of a disclosure below the photo that "lashes enhanced post production"?  We’ll never know for sure because P&G, rather than plead its case, notified the NAD that it was discontinuing the ad and claims.  However, NAD’s “decision” certainly suggests that they would have taken issue with the post production “enhancements.”

This case follows closely on the heels of a recent UK decision involving Julia Roberts in a foundation ad in which the ASA was concerned that consumers may not appreciate that the model was touched up.  The ASA case is arguably distinguishable as the photograph possibly played a much larger role in conveying the claims, but clearly now in light of both decisions photographic “enhancements” even with disclaimers are likely risky.  What is perhaps more worrisome is the NAD’s suggestion that there may have been an implied claim that women using the product will look like Ms. Swift, or at least her lashes.  If the photograph had shown Ms. Swift’s lashes at 2x their volume, as claimed, should P&G have also been tagged with the additional claim that women’s lashes will look like Ms. Swift’s rather than simply being twice whatever their initial volume may have been?  After all, a Ferrari and a Ford Taurus may both run better on high test gasoline, but they’re not starting from an equal playing field.  The NAD’s decision emphasizes the “enhancement” rather than the “results” issue so perhaps that question will be more clearly answered another day. 

In any event, as regular readers of this blog know I sometimes am guilty of oversharing, but here goes again -- I sadly bid farewell to my thick twenty-something lashes long ago, so I suspect even an unretouched Taylor would have dramatically thicker lashes with her Cover Girl mascara than I would using the same product.  I do not feel deceived, and I think at least for now I will keep my day job rather than hope for a lucrative Cover Girl career, particularly since any “post production enhancements” now seem out of the question.

- Amy Mudge

 

NAD: Title Sports Drink, Just Because It’s True Doesn’t Mean You Can Say It

Earlier this month the National Advertising Division of the Council of Better Business Bureaus (NAD ) recommended that the Electric Beverage Company discontinue its ad campaign comparing its Title sports drink to other competing sports drinks, including Gatorade.

Stokely-Van Camp, Inc., the maker of Gatorade, recently brought claims before NAD alleging that the Electric Beverage Company was making unsupported comparative claims. The maker of Gatorade challenged several advertising claims, including claims that Title had more electrolytes and less calories and sugars than Gatorade. They also challenged advertisements that implied that Title allowed players to heal more quickly and that the colorants in Gatorade are harmful.

In response to Gatorade’s challenge, the Electric Beverage Company voluntarily removed or modified some of its claims, including discontinuing the advertisements suggesting that the colorants in Gatorade are harmful and the Terrell Owens commercial implying that Title is why “I play hurt when others sit.”

However, the NAD also found that Title’s claims that its product had five times more magnesium and potassium” than Gatorade and that it has “twice the electrolytes” of Gatorade, while perhaps literally true, implied a superior performance benefit. NAD recommended that Title make only “monadic” claims (e.g. “___ amount of potassium and magnesium”). The NAD’s decision in this case serves as a good reminder that when it comes to advertising claims “truth” is not always a defense.

- Randy Shaheen and Jocelyn Wiesner

CARU Says Never to Justin Bieber Commercial

The Better Business Bureau’s Children’s Advertising Review Unit (CARU) recently recommended that Paramount Pictures discontinue the use of a commercial for Justin Bieber’s autobiographical film Justin Bieber: Never Say Never (which reportedly only covers 20l0, not all 17 years of his life). The decision highlights that CARU will focus primarily on whether it believes an ad message is misleading to a young audience and will not necessarily take into account factors such as whether the ad has been discontinued, was in limited circulation, and was conveyed only in a single ad of a much larger ad campaign.

The commercial at issue features a movie theater full of Bieber fans who are about to see an advanced screening of the film, “or so they think,” hints the commercial’s announcer. “What they don’t know,” is that Bieber is pulling “the ultimate prank”. As the movie begins, Bieber bursts through the screen—in person—to the shrieks and squeals of fans (just shout whenever, and he’ll be there?). The ad touts that the movie is in 3D and fans "have never experienced him quite like this," with Justin gushing, "I have the greatest fans in the world. I hope you enjoy this movie about my life and my journey." The commercial ends with the announcer pondering that the audience is probably “okay” with being “pranked,” and Bieber himself chimes in: “This could happen in your theater.”

CARU did not think it could. The problem, in the view of CARU, is that the commercial, would reasonably give the (wrong) impression that Bieber “would make live appearances at movie theaters where the commercial aired.” The claim was literally true—he did in fact make a few live appearances in Los Angeles (here and here) — but CARU believed the ad implied that fans outside of LA could reasonably hope for a similar sighting of their idol. CARU found the net impression of the ad to be misleading to its intended audience, the impressionable tween and teen girls who make Justin Bieber so popular. Even though this ad only aired for 12 days and represented less than 1% of the hefty ad spend for the film ads (which otherwise did not offer the potential for a live Bieber visit), CARU recommended Paramount not promise again that "this could happen in your theater.” As always when it reviews children’s advertising, CARU considered children’s “special vulnerabilities such as inexperience, immaturity, and lack of cognitive skills needed to evaluate the credibility of advertising.”

While it is true that ravid Beliebers might not have reason or judgment when it comes to their idol’s search for somebody to love . . . one less lonely girl, his fans would probably attend his concert film without the chance to actually meet him, so this short run ad probably had no material effect on them. For its part, Paramount disagreed with CARU’s opinion that the commercial was misleading to children, but it nonetheless agreed not to reUp the ad.

- Any Mudge and Tom McSorley

Pop Goes the Weight Loss Claim: NAD Turns Thumbs Down on Mulberry Bush Product

The NAD (along with the FTC) continues its emphasis on weight loss claims. A recent NAD decision highlights the NAD initiative with the Council for Responsible Nutrition to expand NAD’s review of dietary supplement advertising claims. NAD launched an inquiry into advertisements made by New Nordic US Inc. concerning its Mulberry Zuccarin dietary supplement. The company’s advertisements claimed, among other things, that the supplement stabilized blood sugar levels, helped over 1,500 customers lose weight, and assisted an individual in losing six dress sizes.

New Nordic agreed that its claim that “1,500 customers lost weight” was not supported by the “level of scientific evidence consistent with other allowable claims reviewed in previous NAD decisions.” Consequently, it agreed to discontinue its use of the statement until it could establish sufficient evidence. The company, however, cited several studies and other evidence as support for its other claims.

Consistent with the FTC’s recent fine tuning to its competent and reliable scientific evidence standard, the NAD looked at New Nordic’s studies with a jaundiced eye, noting that they were conducted on the active ingredient in the product rather than the product itself, that dosage levels were different and that many were conducted on animals rather than humans. Not surprisingly, NAD concluded that the evidence submitted was insufficient to support New Nordic’s claims and recommended that New Nordic discontinue its claims. The company agreed.

Given its partnership with the CRN, look for more dietary supplement matters to come before NAD.

- Randy Shaheen and Quin Landon

NAD Rebuffs Biodegradable Claims of Packing-Peanut Manufacturer

While the FTC reviews the many comments received relating to the proposed revised Green Guides, the National Advertising Division (NAD) continues to opine on the level of substantiation needed to make various green claims. The latest of which is its opinion (summary) on the use of the term “biodegradable” by FP International (FP), a company making a packing material called “Biodegradable Super 8 Loosefill”, commonly known as packing peanuts. The Super 8 product is made from recycled polystyrene and is a member of what FP calls its “Green Family” of environmentally-friendly products.

One of FP’s competitors, Starchtech, Inc., a company whose packing materials are made from starch, challenged green-friendly claims made by FP on its packaging as well as in various advertising materials. Promotional statements highlighted FP’s claim that the Biodegradable Super 8 Loosefill product was biodegradable and would “decompose completely within 9 to 60 months” [whether in a landfill (without air) or if littered elsewhere on the ground (with air)]. NAD also examined some of FP’s more-general claims, including those stating that its products were more environmentally-friendly than products made from starch.

Implied Claims of Vegetable Content Sprouts NAD Recommendation for Label Change

Is a tomato a fruit or a vegetable? Is it material or does it fall into the "you say tomato; I say tomato" category? If you’re attempting to measure the fruit to vegetable ratio in your juice blend, it may well be a material claim requiring substantiation.

Campbell Soup Company recently challenged Ocean Spray’s advertisements for its 100% Fruit & Veggie Juice with the National Advertising Division (NAD). The inquiry focused on certain content and nutrition claims made by Ocean Spray and whether such claims amounted to an implicit statement that the juice contained equal amounts of fruit and vegetable juices. This is not Campbell’s first foray into challenging beverage advertising; we recently blogged on Campbell’s complaint to NAD concerning Sunny Delight’s Fruit2O line for its claim that the beverage contained the equivalent of two fruit servings.

In this instance, Campbell’s initially claimed that Ocean Spray’s drinks did not have enough vegetable juice to use the phrase “100% Fruit and Veggie,” although evidence submitted by Ocean Spray showed that all the juices in this line contain at least 25% vegetable juice, which NAD said was a sufficient amount to justify Ocean Spray’s product name.

While the express announcement made by the juice’s name was not considered misleading, NAD had trouble with the juice bottles’ graphics and what several of the express phrases describing the beverage could lead consumers to believe. These statements included phrases such as “2 servings of fruit and vegetables” and “[t]he tastiest way to drink your veggies.” Given these declarations, Campbell’s complained to NAD that Ocean Spray was implicitly stating that its product line contained equal amounts of fruit and vegetable juices, which is not the case. Campbell’s specifically cited the fact that the words “fruits” and “veggies” have equal prominence on the products’ labels:

Ocean Spray countered with the fact that it made no express or implied claims about the beverages’ vegetable content, and that any vegetable prominence would constitute mere puffery. Additionally, the specific flavors in the product line highlight fruits--not veggies--with flavors such as “Tropical Citrus” and “Cranberry Strawberry Banana.” Likewise, Ocean Spray states that the product labels have pictures of fruits in the foreground.

Given that neither side had presented any consumer perception data, NAD used its own judgment to conclude that, while the names and pictures of specific fruits do emphasize the fruit-forward nature of the product, the emblem promoting “2 servings” of fruits and vegetables increases the likelihood that consumers would reasonably come to the conclusion that the product contains more vegetable content than it really does. As Ocean Spray had not provided evidence to support this reasonable conclusion, NAD recommended that Ocean Spray make fruit and vegetable proportions available to consumers on the product labels.

In the current environment, since the 9th Circuit's Gerber Fruit Snacks decision, any food or beverage company making claims about the content or health-value of their products should consider a fresh review to determine what implied claims consumers could reasonably take away and make sure they are substantiated. That's as healthy for the bottom line as eating 5 servings of fruits and veggies daily!

- Amy Mudge and Michael Thorpe

Visual Implied Claim Butts Out Express Claim Says NAD

Little baby bear didn’t pass inspection when he had pieces of the non-Charmin Rippled Brand of toilet paper all over his rear end, according to the narrator of P&G’s latest Charmin Ultra Strong television commercial. The cartoon scene opens with a cute “uh oh” exclamation and a distressed baby bear examining little bits of toilet paper on his bottom with his Mom watching disapprovingly before handing him Charmin ultra strong. Kimberly-Clark, maker of rival Cottonelle, challenged P&G, maker of Charmin, before the National Advertising Division, contending that the superiority performance claims in several of Charmin’s commercials were unsubstantiated and overstated a “typical consumer experience”. At issue were the claims that Charmin Ultra Strong “leaves fewer pieces behind than the Ultra Ripple Brand” and that “Charmin Ultra Strong holds up better.”

After the cute bears, the commercials contained comparative demonstration showing small pieces of wet toilet paper left behind from an unnamed Ultra Rippled Brand while the Charmin Ultra Strong area was completely clean. Several layers of toilet paper were placed on the felt floor attached to a string, sprayed with some sort of liquid, a weight placed upon the toilet paper, and the string was used to drag the toilet paper across the ground for 15 seconds. Cottonelle took issue with all of the above, noting, for example, that consumers do not moisten toilet paper and wait before wiping and that the toilet paper is not typically dragged that far during normal use.

Charmin, with the initial burden of providing a reasonable basis for its claim, presented evidence of wet tensile strength testing to show that Charmin ultra Strong is two and a half times stronger than Cottonelle Ultra, and of a dry rub test across felt and clinical tests to show the amount of pieces leftover to be minimal. NAD was satisfied that Charmin had a reasonable basis for its claim that it leaves behind fewer pieces. Therefore the burden shifted to Cottonelle to show that there was a material flaw in the advertiser’s evidence or that it has more reliable evidence demonstrating a different result. NAD did not find that Cottonelle met this burden because Charmin’s actual clinical evidence was relevant and established the reasonable basis for the claim underlying the demonstration in its ad. However, NAD determined that the visual demonstrations reasonably conveyed the unsupported message that Charmin Ultra Strong leaves no pieces behind and exaggerates the performance differences of the parties’ products, using its own expertise after rejecting Cottonelle’s consumer perception evidence as unrealiable. It found that Charmin’s voiceover saying “fewer pieces behind” did not detract enough from the “no pieces behind” message that consumers received from the cartoon bear's clean bottom. NAD also found that the demonstration overstated the performance differences demonstrated by Charmin and deemed it not entirely “consumer relevant.” NAD recommended discontinuing both the comparative demonstrations and the bare bottom cartoon depiction.

While not at all certain we want to see a demonstration in a toilet paper ad that is more "consumer relevant," we will leave that one to the inspired imaginations of genius personal care products manufacturers. The broader takeaway for marketers of all sorts is to carefully examine ads for what express or implied claims a reasonable consumer could take away from the visuals in your ads, as they must be substantiated and may not be found to be qualified by a voiceover or written text.

- Amy Mudge and Deborah Birnbaum

WEBINAR: Competitor False Advertising Litigation: A Mock TRO Hearing

The editors of the Consumer Advertising Law Blog want to let our readers know about an upcoming online event that may be of interest to you, entitled, "Competitor False Advertising Litigation: A Mock Temporary Restraining Order Hearing." [Full disclosure: Our firm, Arnold & Porter LLP, is sponsoring the event]

The participants in the event will include:

• The Honorable Liam O’Grady, District Judge, United States District Court for the Eastern District of Virginia
• Jerry Wind, The Lauder Professor and Professor of Marketing, The Wharton School, University of Pennsylvania
• Jeffrey A. Fiarman, Executive Vice President and General Counsel, Weight Watchers International, Inc.
• David Mallen, Assistant Director for Legal Affairs, National Advertising Division (NAD) of the Council of Better Business Bureaus
• Nicholas DePalma, Associate, Arnold & Porter LLP
• Randall Miller, Partner, Arnold & Porter LLP

These leading attorneys and professionals in false advertising disputes along with a sitting Federal District Court Judge will present a seminar containing:

• A mock temporary restraining order (TRO) hearing and a judge's viewpoint on successful Lanham Act advocacy
• Strategies for both the affirmative case and defenses in the TRO context
• Planning for the follow-on preliminary injunction hearing (e.g., witnesses, documents, experts, costs)
• How to approach expedited discovery
• Implementing a survey in a short time frame
• The NAD perspective

The event will take place on Tuesday, September 21, 2010 from 8:00–10:00 AM EDT.

If you interested in viewing the event, click here.

The Nuclear Option - NAD Declines to Recommend Product Name Change

ACT Total Care mouthwash recently dodged a big bullet at NAD. NAD reviewed and recommended that the company discontinue claims that its product kill bad breath germs (the advertiser had already voluntarily discontinued claims that its product fights unsightly plaque). However, without specific evidence of consumer confusion, NAD declined to recommend discontinuing use of "Total Care".

A requirement that an advertiser discontinue or tweak claims in advertising (or even labeling) is regrettable, but doable given sufficient time and money. Changing a product name, however, puts at risk a company’s considerable investment in brand equity. While brand names are sometimes found to convey unsubstantiated claims, the problem is often solved through disclosure. For example, the product Aspercreme was required to disclose that it did not contain aspirin.

However, there are a few instances where the advertiser has been required to change the name of its product. In a case prohibiting an aftermarket brake system from using “ABS” as part of a product name or logo, the FTC explained “brand name excision is a remedy that is available to the Commission when a less restrictive remedy, such as a required affirmative disclosure, is insufficient to eliminate the deception conveyed by the name.” The FTC also prohibited use of the trade name Dollar-a-Day by a rental car company when the cost to rent a car was more than a dollar per day. Courts also have broad equitable power to enjoin use of trade names if found to be inherently false and misleading. While the NAD has no power to enjoin advertising, it does make recommendations, including as to product names. For example, NAD once recommended one company discontinue reference to “All Day” in its One A Day All Day Energy supplement.

Major product repositioning can be a great thing -- when it is voluntary (although not always, see New Coke). Forced reinvention by trade name excision is perhaps the harshest of all remedies and is used, albeit sparingly, by enforcers, courts and in the self-regulatory process. To avoid this risk, particular care should be given to review and assessment of the product’s trade name to make sure it does not convey any unsubstantiated express or implied claims.

- Amy Mudge and Randy Shaheen

NAD Process Too Brittle for Wedding Band Wars?

What’s the right metal for your wedding ring? In recent years some jewelers have been encouraging couples saying their “I-dos” to forgo traditional options like gold or platinum in favor of tungsten carbide. Also used in industrial machining and armor-piercing ammunition, this metal is especially popular with grooms--according to a consumer survey by The Knot, almost one in five men’s wedding rings sold in 2009 was made with tungsten carbide. Jeweler Scott Kay, however, recently challenged tungsten carbide’s suitability for use in wedding bands. After refusing to participate in an NAD proceeding brought by Frederick Goldman, Inc., Kay’s claims about tungsten carbide rings may now be under review by the FTC.

It all began last October when Scott Kay held a press conference for the jewelry industry trade press to contest some of the claims being made about tungsten carbide wedding bands. In order to show that these rings are not “hard" and “indestructible”, which he said some unnamed internet retailers have claimed, Kay literally bashed tungsten carbide, shattering a number of tungsten carbide rings by throwing them onto a piece of marble tile and hitting them with a pair of pliers. He later posted a video of his demonstration which declares, “It is the opinion of Scott Kay that carbide is not a practical metal for the use of bridal jewelry.” Kay’s website also depicts magnified images showing that tungsten carbide is porous, which he maintains puts it “at risk of cracking, chipping, or shattering.” Reasoning that a material subject to breaking is not appropriate to symbolize matrimonial commitment, Kay also advertised that “Brittle is NOT for Bridal Jewelry.” The ads urge knot-tiers to choose Kay’s own new line of cobalt alloy rings instead. (Apparently neither Kay nor its competitors think that couples should consider contemporary divorce rates when choosing a wedding band.)

Frederick Goldman, the leading manufacturer of tungsten carbide bands, was none too pleased with Kay’s public metallurgy seminar, and challenged Kay’s claims about the alleged weakness of tungsten carbide and the superiority of cobalt before the NAD. Characterizing Kay’s demonstrations as contrived parlor tricks, Frederick Goldman argued that both Kay’ express claims about tungsten carbide’s brittleness and his implied claim that tungsten carbide bands are not durable enough to withstand a lifetime of normal consumer use were false. Frederick Goldman also challenged Kay’s claims that cobalt rings are produced through a green process and that they can be easily and safely removed in an emergency.

Kay decided against participation in the NAD process, which, of course, is entirely voluntary. Kay maintained that the NAD was not the appropriate forum for this dispute because Kay’s claims “merely respond to” advertising by Frederick Goldman and other tungsten carbide manufacturers, and NAD procedures do not allow for counterclaims. Accordingly, Kay expressed its willingness to defend its advertising in a judicial forum, “where Goldman’s own advertising may be examined in the same light and simultaneously as Scott Kay’s.”

Under the NAD’s procedures, however, “[i]f the advertiser fails to file a substantive written response . . . [NAD] may refer the file to the appropriate government agency . . . .” Faced with Kay’s non-participation, the NAD did just that, sending the matter over to the FTC for further review. Most companies, even if they are confident their comparative claims are substantiated, do not want their file to land on the FTC’s desk. For this reason, among others, voluntary compliance with a NAD investigation is high -- over 90% of companies agree to participate in the process and most of those voluntarily comply with the NAD’s recommendations. The FTC is a public supporter of the NAD and self-regulation generally, and takes NAD referrals seriously. The FTC, however, also recognizes the value of truthful, nondisparaging comparative advertising. Other companies prefer to participate in the NAD process to avoid the more costly airing of the grievance in federal court in a Lanham Act false advertising case (including full blown discovery and in many cases the need to retain survey experts), something Kay apparently welcomes so the fact finder can consider simultaneously both sides of the story. It raises an interesting question of whether the NAD process would be improved or unduly hampered by allowing simultaneous counter challenges.

- Amy Mudge and William Perdue

Apples to Oranges: NAD Recommends Fruit2O Water Discontinue Certain Implied Nutrition Claims

During these hot summer months, nothing beats a cold, refreshing drink of water. Unless maybe that water was fortified with extra nutrients, similar to those found in healthy fruits? Sunny Delight created a water-based beverage, Fruit2O, that they claim does just that- provides refreshment, flavor, and the added benefit of fortified nutrients. Sunny D claims that Fruit2O contains “5 [or 4] nutrients equal to 2 servings of fruit” and touts the beverage as having “The wonders of fruit. The refreshment of water.” Campbell’s Soup Company found exception with the advertising, and asked NAD to examine the claims.

Campbell’s argued that while Fruit2O is fortified with certain nutrients, many are in significantly smaller amounts than in the relevant fruits. As a result, any implied claims that drinking Fruit2O gives consumers the same benefit as eating two servings of fruit are misleading. NAD concluded that Sunny D adequately established that the amount of certain highlighted nutrients present in Fruit2O are at least equal to the amounts found in two servings of fruit.

However, not all the news was sunny. NAD noted the importance of not exaggerating health and nutritional benefit claims for products and expressed concern that Sunny D’s claims drew direct comparisons between drinking Fruit2O and eating two servings of fruit- implied claims that it determined were inaccurate. Even if a product contains certain nutrients in amounts equal to that found in fruit, NAD stated, a consumer cannot be led to believe that drinking Fruit2O will provide the same overall nutritional benefit of consuming two servings of fruit. The implied message of nutritional equivalence was problematic to NAD and it recommended that the “equal to 2 servings of fruit” claims be discontinued. In addition, NAD also advised that the Fruit2O tag line “The wonders of fruit. The refreshment of water” be discontinued as well, because it contributes to the implied message that the beverage is nutritionally equivalent to two servings of fruit.

The takeaway message here is that advertisers should be wary of making apples-to-apples nutritional claims when adding discreet nutrients to foods and beverages. NAD was clear that this type of claim (i.e., that the enhanced product provides the same nutritional benefit as consuming actual fruit) can be problematic. Moreover, NAD noted that these types of claims may be reasonably interpreted by consumers as meaning that nutritionally enhanced products provide the same overall benefits as consuming whole products (like fruits and vegetables) simply because they contain some of the same nutrients. Because whole fruits and vegetables may provide other additional benefits that may not be present in the enhanced product, such advertising may be considered misleading. It is unclear what NAD’s view would be on the relatively common claim that a fruit or vegetable juice product provides the equivalent of a certain percentage of the recommended daily servings of fruit and vegetables.

- Randy Shaheen and Danielle Garten

NAD: In The Land Of The Free, Goods “Like Free” Better Mean Really Free

As we get ready in the USA to celebrate our July 4th Independence Day, we thought it appropriate before we head out of town for the long weekend to ponder being free in the commercial sense or how to substantiate “free” claims. Following a challenge by Office Depot to the advertising claims of Staples and OfficeMax, the National Advertising Division of the Council of Better Business Bureaus has recommended that both companies discontinue their claims of “free” supplies.

The challenged claims included print and Internet advertisements made in connection with the companies’ respective “rewards” programs. The Staples advertisements stated “Buy ANY of these office supplies, get 100% back in Staples Rewards” and “It’s like getting supplies for FREE.” The Staples Rewards program allowed customers who registered for the program to redeem Staples Rewards for future supplies if used within a limited time period.

OfficeMax was challenged for claims made in connection with a similar rewards program. The OfficeMax advertisements stated, "It's like getting one FREE," followed by the disclosure, "Pay $34.99 plus earn $35 in MaxPerks Bonus Rewards". However, OfficeMax’s Bonus Rewards were subject to certain restrictions and limitations: customer couldn't use the reward points for 30 days; the points were subject to cancellation at any time; and the points expired after 90 days. In its challenge to its competitors’ use of the word “free”, Office Depot cited the FTC Guide Concerning use of the Word “Free” and Similar Representations, which states that “when making ‘Free’ or similar offers … all of the terms, conditions and obligations should appear in close conjunction with the offer of ‘Free’ merchandise or service.” Office Depot argued that Staples’ and OfficeMax’s “free” claims violated both the spirit and letter of the FTC Guide because the advertising did not include the conditions and major limitations of its offer clearly and conspicuously.

In response, both Staples and OfficeMax argued that all of the conditions and limitations of their offers were made both clear and conspicuous. Additionally, OfficeMax argued that they had not claimed that the merchandise was “free”, just “like free”.

The National Advertising Division did not find Staple’s and OfficeMax’s arguments convincing, however, and in two June decisions, they emphasized that goods are not free when they come with too many strings attached. The NAD stated “Simply put merchandise is either free or its not”. The NAD added that the word “free” has “cachet with consumers and should be reserved for offers that are truly without cost…”. The NAD recommended that both companies discontinue its’ claims of “free” supplies.

Both Staples and OfficeMax, Inc. have stated that they respectfully disagree with the position taken by NAD and have indicated that they will appeal the decisions.

The Consumer Advertising Law Blog wishes you enjoy a happy holiday weekend, completely 100% with no disclaimers needed free from stress and distraction!

- Amy Mudge and Tiana Russell

"We're Number One" -- Well, Prove It!

I am swept up along with most everyone else in March Madness (North Iowan Ali Farokmanesh's three pointer and the unexpected upsets -- go Big Red!) As we wait for the Sweet 16 round to begin tonight, my thoughts turn to products claiming to be No. 1 rather than chanting collegiate hoop fans.

Sometimes courts view "No. 1" or "favorite" claims as puffery. An oft cited example is the 8th Circuit's opinion regarding "America's Favorite Pasta." The NAD has recently found a particular No. 1 claim, however, to be a claim and not mere puffing and required substantiation based on sales, market share or consumer perception data.

In sports, determining who's No. 1 isn't always so cut and dry and even winning doesn't always end the debate. The same it appears is true in marketing. In the Evercare case, the Company claimed that its lint roller products were the "#1 Selling Roller in the USA" and "America's #1 Selling Lint Roller* Based on independent national retail sales data." A competing lint roller company (You probably didn't realize there was more than one) argued that sales data showed it was the better selling brand. Both companies relied upon IRI data, which shows retail unit and sales information. However, IRI only covered about 50% of the retail stores where lint rollers are sold causing NAD to find that the parties could not rely upon IRI data alone. However, NAD found the data to be sufficient once it was supplemented by point-of-sale data from major retailers such as Wal-Mart and Petco that do not report to IRI. NAD rejected offered shipping data finding that shipping data only reflects wholesale and not retail pricing and does not show how long product stays on the shelf or whether it was returned. NAD also rejected the challenger's position that the No. 1 claim should be based on unit sales rather than dollar sales. NAD based its position on the fact that the price differential between the products was not that significant and also the fact that the products came in varying sizes so that dollars and not units was likely a more accurate measure of popularity.

So what's the post-game locker room message here? Simply this, when promoting your product as No. 1, first determine if you're making a claim and if you are, parse through the data carefully for both completeness and relevance.

- Amy Mudge

NAD Finds Fabric Conditioner "Up To" Claim Substantiation and Disclaimer Too Soft

Earlier this month, NAD announced a decision in a challenge by P&G over Colgate Palmolive's packaging claims for Suavitel Fabric Conditioner. The decision is a good opportunity to review the standards for making "Up To" performance claims and for clear and conspicuous disclaimers on package labeling.

The challenger asserted the express claim on the front of the softener jug of "Up to 34 Loads*" was an unsubstantiated express claim. The advertiser used a disclaimer on the back of the package labeling that said "as measured for small loads." The challenger asserted the claim also falsely implied that consumer would get more loads out of Suavitel than competitive products.

FTC cases and guidance provide that "up to" claims should not rely on an unusual or "outlier" test result. The advertised result should be one that the average consumer can reasonably expect to achieve. NAD cases have opined the "up to" result must be actually experienced by a significant number of consumers, at least ten percent. NAD rejected the challenger's position that the industry standard was to look at usage for regular sized loads, concluding it was not NAD's role to determine an industry standard but instead looked to a reasonable consumer takeaway from the claim in context. NAD considered evidence that less than 10% of customers regularly or routinely wash using small loads so determined the "up to" claim had not been substantiated.

NAD also found the disclaimer that the "up to 34 loads" claim was measured in small loads not clear and conspicuous as it was on the back of the label in small type while the "up to" claim was on the front of the label. While dosing instructions may typically be appropriate for the back of the label, it was found to be material information necessary to qualify the "up to" claim. It leaves open the question as to when, if ever, a claim on a package label can be limited clearly and conspicuously with disclaimer information appearing on a different panel of the label. While everything is reviewed in the context as a whole, material qualifying information on a label typically should appear on the same panel as the claim.

- Amy Mudge

How Should Courts Treat the NAD Process? The Debate Continues

We recently blogged on a decision from the S.D.N.Y granting a stay of a declaratory judgment action to allow the NAD to issue its decision in the same dispute. Another court has now weighed in with a different view.

NAD was in the process of deciding whether Priceline’s claim that customers could save “half off” or “up to half off” of hotel prices compared to Expedia and Hotels.com was misleading, when Expedia filed a Lanham Act false advertising suit. (NAD had previously resolved a different dispute involving the same parties.) NAD closed the case because the dispute at issue was now the subject of pending litigation, but expressed its willingness to reopen the case and render a decision should the court remand the case to NAD. Priceline filed a motion to stay and submitted a declaration from NAD noting it “believed it would be beneficial to share with the parties the analysis it would have conducted had procedural considerations not required an administrative closing.”

While the Court (Western District of Washington) concluded it had the power to order the requested stay, it would only do so if there would be “some advantage in terms of efficiency or fairness.” The Court concluded there would be neither in this case finding:

“nor is it this Court’s role to safeguard the relevance and effectiveness of an industry self-regulatory body. If NAD’s rules allow a challenger to ‘opt out’ of the NAD process by filing a duplicative court action, the obvious remedy would be to amend the rules if the industry agrees that this is not an optimal use of the parties’ or the organization’s time and resources. This Court will not provide a ‘fix’ or attempt to send any sort of ‘message’ to other participants in the NAD process based on the limited information before it.”

Will we see a rule change from the NARB? Stay tuned.

- Amy Mudge

Memory Boosting No Laughing Matter at NAD

First, you need to watch this ad:

All of us can appreciate a commercial that makes us laugh but sometimes the claims still strike a serious note. The ad you just saw was reviewed by NAD as part of its internal monitoring program rather than based on a challenge lodged by a competitor. The ad, for Minute Maid Enhanced Juice Blend shows a young woman approach a man and say “I think you are the father of one of my children”. Man looks confused for a moment and says “Cancun, Spring break ‘99?” The announcer declares “Opps, someone forgot to boost” and a close up shot appears of the juice with the label that reads “5 nutrients to support brain and body.” The scene plays again, after the man takes a big gulp, but this time in response to the woman’s question, the man remembers she is the art teacher of one of his children.

The advertiser asserted that this was a classic structure/function claim in which the juice is fortified with nutrients to “help nourish your brain” and “with 5 ingredients to support brain and body”. Such claims, the advertiser asserts, are permitted by the FDA for dietary supplements and functional foods when the claims are supported by studies and limited to promoting the role the nutrients play in the structure and function of the body as opposed to any claims of curing disease. The advertiser points to numerous ingredient studies showing that the nutrients added to its juice, DHA, choline, Vitamins B12, C and E and glucose, all support the brain and body.

So far so good but NAD’s analysis did not end there. NAD found the ad included an implied claim that drinking the juice will result in substantially and immediate improved memory capabilities based on the fact that the man in the ad took a sip of his juice, got a boost and then was able to correctly recall the identity of the woman. While NAD agreed with the advertiser that the depiction was not a literal product demonstration, NAD concluded that the use of humor still can convey messages that require substantiation. NAD concluded that the proffered studies did not support the claim of improved memory in healthy adults but were generally limited to studies of elderly subjects with mild age-related cognitive decline and to effects in infants and children. NAD recommended that the advertiser discontinue the ad.

As this case demonstrates it is often difficult to draw the line between making a point with humor that is so exaggerated that no consumer would literally believe it (think Holiday Inn Express commercial where guest who sleeps there overnight can do amazing things the next morning) versus using humor to make your claim to consumers in a way they will find appealing. And, in today’s regulatory environment, claims relating to health and nutrition may be no laughing matter.

And just to prove there is nothing wrong with our memory, here’s another funny ad relating to memory that’s one of our favorites.

Advertising legend has it that while this ad met with industry approval, it was pulled after its showing during the 1997 Superbowl -- not because the claims weren’t true but due to protests from franchisees and a call in campaign from offended viewers.

- Amy Mudge

The Damage Caused by Bad Breadth

In a recent federal Florida decision, Smith v. W.R. Wrigley Jr. Co, the Court denied a motion to dismiss claims brought on behalf of a putative class alleging that Defendant Wrigley’s claims “that its Eclipse® gum brand is ‘scientifically proven to help kill the germs that cause bad breath’ as a result of the ‘natural ingredient,’ Magnolia Bark Extract (‘MBE’)” were false, deceptive, and likely to deceive. Plaintiff asserted two causes of action -- violation of Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”) and breach of express warranty.

As to the FDUTPA claim, Wrigley argued that Plaintiff only made “conclusory allegations” that the gum caused her to suffer “actual damages.” Critical to the Court’s decision was the fact that Florida courts have allowed diminished value to serve as “actual damages” under the FDUTPA, and that Plaintiff had alleged that Wrigley was able to “charge a price premium” for the Eclipse® gum based on the allegedly false statements.

The Court distinguished Prohias v. Pfizer which involved allegations that advertising Lipitor as reducing the risk of heart disease in women or elderly patients was deceptive. The Court distinguished the Lipitor case on the grounds that, in that case, the court found that “the fact that [the plaintiffs] currently take Lipitor, in light of the information they have, requires me to conclude that they take Lipitor for its cholesterol-reduction or other undisputed health benefits, and therefore cannot claim to have suffered any damage from the alleged misleading statements about Lipitor’s coronary benefits.” Likewise, the Court distinguished Frye v. L'Oreal USA, a case where plaintiff alleged that the defendants marketed lipstick as “safe for use” when it contained dangerous amounts of lead, on the grounds that, in that case, there was “no allegation that the presence of lead in lipstick ha[d] any observable economic consequences.” Thus, the Court’s Wrigley decision appears to hinge on Plaintiff’s allegation of a “price premium” associated with the deceptive advertising.

Whether Plaintiff’s claims of paying too much for gum that does not prevent bad breath will survive remains to be seen, as it is one thing to allege damages based on a premium price and quite another to prove such damages on a classwide basis (a blog for another day). But the case represents another court’s attempt to clarify the allegations of damages sufficient to survive judgment on the pleadings, here under a Florida consumer protection statute, in a consumer false advertising case.

Another point of interest is that the Complaint in support of the false advertising allegations is based on a decision earlier this year by the National Advertising Division of the Council of Better Business Bureaus, Inc. (“NAD”) recommending modification of Wrigley’s campaign, which is on appeal to the National Advertising Review Board. While not the subject of the motion to dismiss decision, it is an interesting question as to what weight, if any, NAD decisions can or should be given by a court in either a Lanham Act false advertising challenge or a consumer fraud case. NAD can be an excellent low-cost, fairly speedy forum for resolution of competitor’s disputes over the truthfulness of advertising claims. When NAD issues a decision, however, it is based on an incomplete record limited to party submissions and issued quickly, albeit by NAD staff lawyers who specialize exclusively in this area, but lawyers working under the tight time constraints of the self-regulatory process. The NAD decisions are thoughtful and comprehensive, but they are hearsay. Whether and how courts consider NAD decisions in litigation is an emerging question we are watching with great interest.

- Rachel Chanin and Amy Mudge

You Say Biodegradable, NAD Says Compostable

As many of you know, most trash ends up in landfills and landfills are typically designed to prevent biodegradation because of really nasty things that can happen involving gas.  Thus it is often difficult to make a biodegradable claim because the FTC requires that products with such a claim biodegrade within a reasonably short period of time following customary disposal. If it won't breakdown in a landfill, but it will degrade in a backyard or commercial compost facility, it can likely be labeled "compostable." 

 Yesterday, the NAD posted a press release summarizing its findings in a challenge brought by Method Products about advertising claims made by Clorox for its Green Works Natural Cleaning Wipes, whereby Clorox described the wipes as “biodegradable” but then added qualifying language on the back of the container that said "biodegradability validated in typical compost conditions.”

In other words, the question before the NAD was, can you make a broader (and presumably more consumer friendly) claim of "biodegradable" but then qualify it to clarify that what you really mean is that the product is essentially compostable.  Because Clorox stated that it was transitioning to new packaging that would use the term "compostable", NAD did not have to directly address the issue, but noted that it "appreciated" Clorox's decision to discontinue the biodegradable claim in favor of a compostable claim.

- Randy Shaheen and Danielle Garten

FTC Looking to Regain Ground after Recent Substantiation Setbacks

At yesterday’s Roundtable Breakfast Series program on false advertising disputes hosted by Arnold & Porter LLP, Mary Engle, the FTC’s Associate Director for Advertising Practices, outlined the FTC’s plan to tighten up the substantiation requirement the agency includes in consent orders related to health claims. This comes after the FTC has suffered setbacks in its attempts to enforce such consent orders because courts have found that the advertisers were meeting their obligations to have competent and reliable scientific evidence substantiating their claims. Our analysis of one of these cases, Lane Labs, can be found here.

Mary Engle noted that the current substantiation requirement was meant to be tough while at the same time providing defendants flexibility in how they met it. However, some courts have not interpreted the standard in the manner intended by the FTC. She set out three primary goals for the new, tighter substantiation requirement that the FTC will roll out in future consent orders:

• It will be easier to enforce as a result of its greater specificity, which will also provide defendants greater clarity on what substantiation they need to possess.
• It will better harmonize with the laws and regulations of other agencies, such as FDA.
• It will address situations where the results of a single study relied upon by the advertiser are inconsistent with the weight of scientific evidence in the field.

We will monitor the FTC’s implementation of this new substantiation requirement for health-related claims and keep you up to date on developments.

Also presenting at the Roundtable program were David Mallen, Associate Director of NAD, who talked about current advertising issues in NAD cases, Michael Mazis, Professor Emeritus of Marketing at American University’s Kogod School of Business, who talked about methodological issues in consumer advertising surveys, and Randy Miller, a partner at Arnold & Porter LLP, who talked about Lanham Act false advertising litigation.

Materials from the Roundtable program can be found here.  Audio from the program is available here. 

- Matthew Shultz

NAD’s Role in Evaluating Claims Underscored by District Court Stay

The U.S. District Court for the Southern District of New York made an interesting statement by granting a stay in furtherance of NAD’s jurisdiction in the case of Cellco Partnership (d/b/a Verizon Wireless) v. AT&T Mobility LLC. The case was initiated by AT&T filing an NAD challenge against Verizon regarding Verizon’s “most reliable network” claim. In response, Verizon filed a lawsuit in the Southern District of New York asking for declaratory judgment under the Lanham Act that the claims were not misleading. Following Verizon’s filing, NAD closed its investigation of the matter in accordance with its procedures that require it to close any case that is the subject of a pending litigation.

AT&T requested a stay in the litigation, arguing that NAD should be able to re-open the case and continue its investigation in furtherance of judicial economy. The court did not write an opinion, but “So Ordered” the stay, allowing NAD to re-open its investigation and continue in its evaluation of the claims.

The Southern District granted a similar request in the case of Russian Std. Vodka, Inc. v. Allied Domecq Spirits & Wine USA, Inc. in 2007. In that case, the court stayed a false advertising litigation to permit the NAD process to continue. These cases underscore the importance the courts are placing on NAD’s role in the investigation and evaluation of advertising claims, as well as the level of regard the courts have for NAD’s level of expertise.