Nuts and Bolts of NAD Proceedings

Masters of Advertising Law Conference attendees: Scroll down for CLE materials

Barry M. Benjamin, partner at Kilpatrick Townsend & Stockton LLP, Laura Brett, VP of national advertising division and New York office leader at BBB National Programs, and Robert S. Jones, corporate counsel at S.C. Johnson & Son, Inc., discussed the basic nuts and bolts of NAD proceedings, including how to bring a challenge and how to defend one.

Key Takeaways

The National Advertising Division (NAD) is the self-regulatory body that monitors advertising for truth and accuracy. NAD cases can come from competing advertisers, consumers, and NAD monitoring. The NAD helps level the advertising playing field and build consumer trust across the industry. Ninety-five percent of companies participate and comply with the NAD. Non-compliant advertising is sent to the FTC.

Overview of competitor challenge

If a brand wants to challenge a competitor's ad, it sends a letter to the NAD through its portal stating:

  • The specific claims being challenged (expressed and/or implied)
  • The ads containing the claims
  • Why the challenger argues the claims are false

The letter can also include evidence containing affidavits, expert reports, news articles, industry blog posts, and more. The NAD then considers the challenge, and if it's accepted, it sends its own letter to the advertiser in question detailing the claims they must substantiate.

After responding with their evidence, the challenger and the advertiser both meet with the NAD individually. During these meetings, the parties involved should bring experts, scientists, and whatever outside counsel that can help them substantiate their claims. Written evidence is submitted for record in case of an appeal. Any evidence not submitted on record can't be used for an appeal.

Press release

The only thing made public about an NAD decision is a press release stating whether the advertiser in question was compliant and whether they will appeal. The advertisers can suggest language to be incorporated into the press release and recipients — trade publications, journalist etc. — it can be distributed to. The press release or the decision can't be used for promotional purposes. For example, if a challenger wins a claim, they are permitted from promoting the fact that they won.

The Three NAD Tracks

The NAD now has three tracks for handling cases: standard, fast-track, and complex.

Standard

Fifty-five percent of all NAD proceedings are standard track. Standard track proceedings are as follows:

  • The competitor submits a challenge letter (20 pages max) with attached evidence.
  • The advertiser submits their response (20 pages max) within 15 days.
  • The challenger can either waive their right to reply to speed up the process or reply (20 pages max) within 10 days.
  • The advertiser provides a sur-reply (20 pages max) within 10 days.
  • A meeting takes place between the advertiser and the NAD within 15 days of the advertiser's sur-reply.
  • The NAD provides a decision to the advertisers.
  • The advertiser submits a statement expressing whether they will comply or appeal the decision (no more than half a page).
  • The decision is published on NAD's online portal, behind a subscription firewall, with a subsequent press release summarizing the proceedings and decision being published on NAD's public website.

Fast-track

Twelve percent of NAD proceedings are fast-tracked. Fast-tracked proceedings:

  • Take 20 business days in total
  • Are single issue proceedings related to disclosures in influencer marketing, native advertising, incentive reviews, or misleading pricings and sales claims
  • Begin with the submission of a challenger letter (five pages plus up to five exhibits along with statement on why the challenge is appropriate for fast-track)
  • Allow advertisers to object to a fast-track within four business days with the NAD responding to the objection within two business days

Complex track

Two percent of NAD proceedings are complex track. Complex track proceedings involve:

  • A challenge letter (30 pages max with attached evidence)
  • A meeting within NAD for scheduling and due dates
  • An advertiser response (30 pages max)
  • Mid-briefing meetings held by the NAD to provide guidance and initial thoughts
  • A final meeting with each party individually
  • A press release, advertiser statement, and appeals process in line with standard track proceedings

CLE Materials

Source

"Nuts and Bolts of NAD Proceedings." Barry M. Benjamin, partner at Kilpatrick Townsend & Stockton LLP; Laura Brett, VP of national advertising division and New York office leader at BBB National Programs; Robert S. Jones, corporate counsel at S.C. Johnson & Son, Inc. 2022 ANA Masters of Advertising Law Conference, 11/8/22.

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