Agreeing with a decision from the National Advertising Division, a National Advertising Review Board (NARB) panel recommended that Staples discontinue or modify the claim “[I]t’s like getting supplies for FREE.”

In print and Internet materials, Staples made the claims “Buy ANY of these select office supplies, get 100% back in Staples Rewards . . . .It’s like getting supplies for FREE!” and “Buy ANY backpack, get 100% back in Staples Rewards. It’s like getting a FREE backpack!” Customers who registered for the Staples loyalty program received a portion of the cost of their initial purchase in Staples Rewards, which could be used for future purchases. Competitor Office Depot challenged the claims.

The NARB panel determined that given the text, graphical presentation and the emphasis on the word “free,” one of the ads reasonably conveyed the message that consumers who purchased the advertised items would receive another item for free (a backpack, for example). The term “free” was a predominant feature of the ads, the panel noted, and it was presented in capital letters with much larger type size, and usually in a different color from the surrounding type.

“It is clear that Staples is not offering ‘free’ merchandise as suggested by the challenged advertisements,” the panel said. Customers had to buy a product, register or enroll in the loyalty program, wait a month to receive their Rewards points, and then use the points within a limited amount of time. The panel disagreed with Staples’ argument that the word “like” adequately qualified the word “free,” primarily because of the significant emphasis placed on the word “free” in the ads. In addition, the company failed to clearly and conspicuously disclose all of the material conditions related to obtaining Rewards points, particularly the limited time period in which to use the points before expiration. The panel also noted that advertisements can tout the benefits of a loyalty program, but said that Staples’ ads should be modified or discontinued because they created “the strong implication that consumers will receive the referenced merchandise for free or obtain a similarly immediate benefit with their original purchase and do not adequately convey material terms and conditions to counter that message.” In its advertiser’s statement, Staples said it disagreed with the NARB panel’s conclusions but said it would take the recommendations into account in future advertising.

To read a press release about the NARB’s decision, click here.

Why it matters: This decision gives companies guidance regarding the NARB’s position on the use of the term “free” in advertising claims. “The term ‘free’ is a powerful advertising term,” the panel emphasized. “Any offer of free merchandise must be made with extreme care. All of the terms, conditions, and obligations necessary for receipt of free merchandise should be set forth clearly and conspicuously at the outset of the offer.”