Wednesday, May 13, 2020

Navigating NAD's new fast track program for challenging advertising

“Navigating SWIFT – An Inside View of NAD's Fast-Track Process”, presented by Laura Brett, Vice President, NAD, BBB National Programs, and moderated by David Mallen, Co-Chair, Retail and Consumer Brands, Loeb & Loeb LLP.

[Despite its cutesy name, I am hopeful that NAD’s SWIFT (Single Well-defined Issue Fast Track) will be able to address some common claims more expeditiously than ordinary NAD proceedings.]

Eligible claims: (1) prominence/sufficiency of disclosures including in influencer marketing, native advertising, and incentivized reviews; (2) misleading pricing and sales claims (e.g., “free” that has persisted for 3 years and is thus just part of the price of the package; discounts that don’t adequately explain/account for the claimed discount); (3) misleading express claims that don’t require review of complex evidence or substantiation (not whether or not that specific claim can be substantiated with sufficient evidence). 20 business days to decision. If advertiser is claiming to cure coronavirus, that could be reviewed under (3) even though actual substantiation would require complex evidence.

Requirements: provide advertiser’s contact info (can be very hard to find the right person at the advertiser if they’re a first time participant in NAD—marketing counsel or other right person would be ideal; can delay start of case); copy of challenged ads w/date/platforms; brief statement of SWIFT appropriateness; brief description of facts showing how ad is likely controlled by advertiser; exhibits to show challenged claim is not substantiated (if applicable). So for coronavirus, you’d say “virus has not been around long enough for this claim to be substantiated.” 5 pages, no more than 5 supporting exhibits (not including the advertising itself).

Day zero: case starts when NAD determines SWIFT is appropriate. Advertiser has 4 days to object to SWIFT process; if objects, NAD will decide in 2 days. Should not delay preparing substantive response—objecting to jurisdiction doesn’t toll time to substantive response. Substantive response is due day 10, limited to 5 pages/5 additional exhibits. Phone/video meetings held at NAD’s discretion, and they’re usually held—though they may not need to be for some SWIFT cases. Decision will not be held up if meetings can’t be scheduled.

Day 20: decision sent to both parties at same time; advertiser statement is optional. Assume compliance; if they don’t comply, there will be referral to FTC. Press releases issued afterwards; anticipate releasing them in bulk. Will be available in the online archive.

Q: Is 20 days aspirational or a promise?

A: we are confident we can deliver.

Q: how will NAD evaluate whether the issue is simple? Will decisions provide written guidance?

A: we will look at that twice. If advertiser shows us complexity of substantiation required, and it’s not as simple as challenger said, we’ll close it as a SWIFT case. If that happens either at the outset (challenger’s initiation) or when advertiser objects, challenger can either close case/refile or transfer to a standard challenge.

Q: if there’s a transfer, can the challenger add claims?

A: you’d have us close the SWIFT case, return the filing fee (or use it as part payment of standard track fee), and refile.

Written decisions will explain why case was accepted into SWIFT. We anticipate that we might be able to include some analysis in transferred cases about why it was inappropriate for SWIFT.

Q: is SWIFT appropriate for challenging an influencer campaign across multiple platforms?

A: potentially. If the advertiser just requires #spon for all influencers, that’s a single issue. If some of the influencers are good and some are bad and have different problems, that could get beyond a single issue.

Q: how much detail will appear in the ultimate decision? Will it have the same kind of precedential value?

A: we have removed party positions from regular NAD decisions, and will do so for SWIFT too. Will be in database and separately searchable as SWIFT cases. But we will lay out the arguments on both sides in order to allow guidance/precedential value. Competitors should be able to get guidance.

Q: tension b/t speed and voluntariness. What will happen if advertiser seeks extension?

A: will entertain requests. But are committed to 20 days on our end. Shouldn’t need consumer perception studies, though extenuating circumstances do matter. NAD would have to shorten its window for decision. FTC is very supportive of process and remains willing to be the “stick.”

Q: will press releases be the same?

A: Different. Plan is monthly release of all SWIFT cases resolved that month. Wary of competitor shaming given speed of process.

Q: why can’t you decide all your cases this quickly?

A: we’re committed to improving that, learning from this.

Q: any insights on what’s not appropriate for SWIFT/whether this might expand?

A: we thought about different categories, e.g. implied claims. Implied claims are more complicated, may require legal analysis/consumer perception surveys. Didn’t want to start w/something controversial to regular NAD users. We also considered “clear violations of FTC Guidelines,” but that seemed too open to argument to start.

Q: how do you get advertisers to participate?

A: we generally see 5-10% refusal/noncompliance; does not expect that to change. Companies even unhappy w/process often see tremendous value in having a level playing field; new participants often bring challenges of their own once they see the process.

Q: stats?

A: two cases so far, both determined appropriate. One resolved so far, on consent of both parties.

Q: do you have the resources to do this w/o delaying other cases?

A: potentially will hire more, after we see how users respond. Can retask attorneys.

Q: will there be a special SWIFT department?

A: that’s our intent. One person will oversee appropriateness of SWIFT.

Q: what feedback have you heard so far?

A: positive so far. See what happens in 6 months.

Q: any difference in appeals? Advertiser won’t be able to appeal appropriateness decision, but when you reach decision, what then?

A: similarly 20 days. 3 person panel, remote hearings (which we now have experience w/). Even issues that don’t require complex substantiation may be hard cases.

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