The National Advertising Division of the Council of Better Business Bureaus (NAD) held its annual meeting last week in New York City.  The NAD’s mission “is to review national advertising for truthfulness and accuracy and foster public confidence in the credibility of advertising.”  The NAD provides a process through which national advertisers can resolve disputes about advertisements that is an alternative to more expensive litigation.

The speakers at this year’s NAD’s annual conference explored legal trends and key issues in online behavioral advertising, claim substantiation, the use of surveys, social media, mobile marketing, and current advertising litigation.

Representatives from the FTC report that the agency is in the process of revising its Green Guides and is currently reviewing the hundreds of comments submitted in response to the proposed revisions announced last year.

One recurring theme throughout the two-day conference was the various initiatives for advertisers to self-regulate to ensure consumer privacy.  Self-regulation was mentioned by speakers from Google and representatives, or their attorneys, from numerous companies participating in the self-regulatory Network Advertising Initiative (NAI); and, earlier this month, a large coalition announced the details of a self-regulatory program that they say will give consumers enhanced control over the collection and use of data regarding their Web viewing for online behavioral advertising purposes.  The program promotes the use of the “Advertising Option Icon,” and accompanying language, to be displayed within or near online advertisements or on Web pages where data is collected and used for behavioral advertising.

Leslie Fair, the Federal Trade Commission’s leading enforcement attorney explained the FTC’s priorities as: 1) protecting consumers in tough economic times, 2) ensuring advertisers substantiate claims, 3) rethinking privacy in the new information marketplace, and 4) applying established law in a Web world.

Several recent FTC consent orders articulate clearly FTC’s expectations for substantiation of certain claims.  For example, an FTC complaint alleged that Dannon Company explicitly or implicitly represented that one serving of DanActive was clinically proven to help to avoid colds or flu.  The advertising described in the complaint explicitly claimed only that DanActive helps strengthen the body’s defenses in the context of a reference to immunity – a claim frequently made for many probiotic products.  Under the terms of the settlement, Dannon would forgo making some claims unless they are permitted by FDA regulations and other claims unless they are supported by “at least two adequate and well-controlled human clinical studies. . . conducted by different researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that the representation is true.”  Thus, a standard to substantiate specific health claims seems to have been articulated.

At the conference, emerging consensus could be observed in the following areas: 1) the regulatory expectations of what is satisfactory substantiation is increasing, especially for certain health claims, 2) as advertisers push the trend to increase focus on online advertising, the regulators intend to reassign enforcement resources accordingly and intend to attempt to adapt well establish legal principles to new mediums of communication and marketing strategies, and 3) class action suits (Nonni’s All-Natural Biscotti, Bear Naked, Inc., Kashi Company) pending in California and elsewhere challenging green marketing claims should be closely monitored.