NAD: Our rulings can’t be used in ads

Violating a National Advertising Division rule isn’t the same as violating a US law. But advertisers rely extensively on the self-regulatory system to handle disputes and determine whether specific ads are misleading and should be pulled.

Companies generally abide by the self-regulatory body’s rulings. While they try to massage the truth in ways that favor their own brands, they want to have some credibility left over to bring complaints against misleading ads launched by their competitors. The self-regulatory system also may help minimize government regulation of false and misleading claims, although the NAD does sometimes refer particularly egregious cases to the Federal Trade Commission.

While the NAD routinely issues decisions that a particular ad is misleading and should be changed or removed, the public rebuke of AT&T was unusual. AT&T’s action, it said, threatens the integrity of the entire self-regulatory system.

NAD procedures state that companies participating in the system agree “not to mischaracterize any decision, abstract, or press release issued or use and/or disseminate such decision, abstract or press release for advertising and/or promotional purposes.”

The NAD said:

In direct violation of this, AT&T has run an ad and issued a press release making representations regarding the alleged results of a competitor’s participation in BBB National Program’s advertising industry self-regulatory process.

The integrity and success of the self-regulatory forum hinges on the voluntary agreement of participants in an NAD proceeding to abide by the rules set forth in the BBB National Programs’ Procedures. As a voluntary process, fair dealing on the part of the parties is essential and requires adherence to both the letter and the spirit of the process.

AT&T’s violation of its agreement under the Procedures and its misuse of NAD’s decisions for promotional purposes undermines NAD’s mission to promote truth and accuracy of advertising claims and foster consumer trust in the marketplace.

AT&T omits its own history of misleading ads

The NAD told Ars that “we did issue a cease-and-desist letter to AT&T on Friday, October 24, the day after the company issued its press release and launched the ad campaign. The letter demanded that AT&T immediately remove such violative promotional materials and cease all future dissemination.” A cease-and-desist letter can lead to a lawsuit, but the NAD told us it “will not speculate on potential next steps.”