The Latin phrase CAVEAT EMPTOR, “let the buyer beware”, originated in 1603 in the English case Chandelor v. Lopus. The case involved a goldsmith who sold a bezoar stone to a customer who later sued the seller after discovering the stone wasn’t healing him. The court ruled that the seller wasn’t responsible for making any warranties about the stone’s healing properties.
A lot has changed since 1603; the world is a much more complex place. requiring more nuanced law when it comes to protecting consumers and promoting fair competition.
Fast forward to 2024 when there are multiple systems in place to ensure that advertising is truthful and not misleading, including the Federal Trade Commission (FTC), the National Advertising Division of the Better Business Bureau (NAD), corporate attorneys and outside law firms.
The NAD held its annual conference Charting the Future of Global Ad Law earlier this month. When countries have varying regulations, it becomes challenging for advertisers to ensure compliance.
As the conference title suggests, there is a growing trend toward international cooperation to harmonize advertising standards with the goal of creating a more level playing field for advertisers and protect consumers worldwide.
Conference attendees heard from special guest Guy Parker, President of International Council for Advertising Self-Regulation (ICAS) with a key highlight being his announcement of the official launch of the ICAS Global Think Tank. Stay tuned for more information on the work that ICAS is doing to advance global harmonization in ad law.
The NAD team also provided updates on the types of cases they’ve been reviewing and the current “hot topics”. Here are some of the most interesting takeaways:
- Increased focus on dietary supplement claims: these ads have become a focus of scrutiny; in 2023, 3% of cases heard by NAD were related to dietary supplements; in 2024 that increased to 12%. This heightened focus can be attributed, at least in part, to the fact that these ads are often intended for vulnerable populations such as those who are aging and health-challenged consumers.
- Continued attention on Green/Sustainability/Environmental claims: these claims can be complex and, therefore, require strict scrutiny. A recent case brought by the Glad Products Company against HoldOn Bags Inc. earlier this year highlights how NAD thinks about “compostable” claims. HoldOn says their trash bags are “super strong, durable and made with plant-based and compostable materials”. It was the “compostable” claim that was in question. After careful review, NAD ruled that HoldOn has a reasonable basis to claim that its trash bags break down in compost environments. However, NAD recommended that HoldOn take care to ensure their communications avoid conveying messages of general environmental benefits, avoid consumer takeaway that HoldOn bags are not plastic, and that HoldOn clearly and conspicuously disclose the circumstances in which the bag would degrade. The FTC’s Green Guides are a great tool for advertisers playing in this space. Look out for version 3.0 of the guides to be released soon.
- Discussion around “dark patterns”: these are deceptive design elements used in advertising to manipulate consumers into giving up their time, privacy or personal information or to buy products or services they didn’t intend to purchase. Who among us has not struggled to cancel a subscription because the company seems to make it purposely difficult? A word of caution here – it’s not only the FTC and NAD who are focused on dark patterns. Look at your ads and practices from the perspective of an activist because in many industries they ARE out there scanning for this.
- The impact of technology on Advertising Law: The rapid advancement of artificial intelligence has introduced new challenges in advertising. While AI offers exciting opportunities, it also presents challenges, such as AI-powered fraud and deceptive claims. Deepfakes, for example, can be used to create misleading or harmful content. Regulators are working to develop guidelines to address these issues with the goal of stopping AI-powered fraud (voice cloning), protecting consumers from deception about what AI can provide (for example, AI-based investment opportunities), and so much more. Advertisers should be aware of these risks and take steps to protect consumers.
- Let’s end on a fun note, PUFFERY: While “puffery” is often used to describe exaggerated claims, the context in which these claims are made plays a crucial role. A claim like “world’s best coffee” might be considered puffery (just ask Will Ferrell in Elf), however if it’s accompanied by specific attributes or comparisons, it could become a more substantive claim requiring evidence.What surrounds the “best” claim matters.
In the case of Old Trapper Jerky, NAD found that their “Clearly the Best Beef Jerky” slogan conveyed a message of corporate pride and is not comparative as no specific competitor or ingredient is identified. However, on Old Trapper’s social media account, they asserted that “We use only the highest quality ingredients in every Old Trapper flavor. That’s just one of the reasons why Old Trapper is #ClearlyTheBest”. Because the “highest quality ingredients” was linked to the “Clearly the Best” claim, NAD recommended that Old Trapper discontinue or modify these claims to avoid conveying that they use superior ingredients.
In our increasingly more complex world, it’s more important than ever for advertisers to stay informed about advertising laws so they can create effective marketing campaigns for their brands while adhering to legal standards of transparency and consumer protection.
And when consumer substantiation is required for your ad, make sure you partner with a firm like RTi Research that understands the intricacies of this landscape.