For the first time, a Working Group from the American Bar Association, which included a member of Manatt, Phelps & Phillips’s Advertising, Marketing and Media group, conducted a review of the National Advertising Division and released a report offering recommendations for improving the self-regulatory body.
Initiated at the request of Advertising Self-Regulatory Council (ASRC) president Lee Peeler, the Advertising Disputes and Litigation Committee and the Consumer Protection Committee (as well as others in the industry), the Working Group began its review last June. The final report—“Self-Regulation of Advertising in the United States: An Assessment of the National Advertising Division”—recognized “the value” and “success” of the NAD, and concluded that overall the current system “works well.”
However, the Working Group also made several improvement suggestions that include raising additional operating funds from direct contributions or cy pres awards from false advertising litigation. The NAD could also increase the appearance of objectivity by having an attorney review and decide the case and a different attorney to investigate the prospective case for an NAD-initiated proceeding.
With regard to filing a claim, the Working Group suggested that the ASRC clarify the rules governing the NAD’s jurisdiction, specifically the scope of “advertisers” over which the self-regulatory body has authority. Reconsideration of page-limit restrictions for complaints and briefs and the possibility of a private, mutual settlement agreement between the parties—terminating the case by the NAD without its approval and without a press release—were also proposed.
The Working Group next evaluated the presentation of a case. While the current “case-by-case approach” to survey evidence should continue, some Working Group members noted that the industry would value additional guidance on the type of survey evidence considered persuasive by the NAD. The report suggested that the NAD adopt different tracks or a tiered approach to case management based on the complexity and number of claims involved in a case and reconsider its current expedited review procedures. It suggested that the NAD proceed more quickly in cases with only one or two claims at issue, implement strict limits on page numbers and witness statements, and raise the current filing fee.
Turning to the issue of decisions and press releases, the Working Group advised the NAD to use a “single and shorter synthesis” of relevant facts to reflect the positions of both parties in lieu of the current separate, more detailed statements setting forth each side’s position. Decisions should be issued in a more timely manner after the final briefs are submitted, the Working Group added. The Group also suggested that meeting schedules be set at the beginning of a case, that videoconferencing technology be used, and that tracked or tiered brief schedules based on the number and complexity of the claims at issue be established.
Funds should be prioritized to modernize the ASRC’s online archive, the report stressed, “allowing for reliable and efficient searching across all NAD decisions, providing proximity search functionality, and highlighting search terms within decisions.”
The report further suggested that abstracts or summaries of NAD decisions be published in lieu of the current system of press releases, unless an advertiser refuses to participate and the NAD has referred the matter to a regulatory agency. “The Group believes that this will conserve resources and ensure consistency between the information publicly disseminated and the case decision itself,” the report stated.
The appeals process and standards could also use improvement, the Working Group concluded. It suggested that the NARB review decisions de novo and that new arguments (but not new evidence) should be accepted. The NAD should not be a party to an NARB appeal, but should be “present and available” to answer questions from the panel.
Other suggested changes included revisions of certain rules to offer new evidence in support of a claim that has previously been found to be unsubstantiated in certain circumstances, shortening the time period for an advertiser’s response to the NAD’s initial recommendation and final decision, and an increase in time for the advertiser’s response to a compliance inquiry.
To read the Working Group’s report, click here.
Why it matters: “The Group hopes this Report will be an initial step in a dialogue that will continue in future months and is prepared to assist in implementing or further exploring the Report recommendations,” the Working Group wrote. While many of the recommendations are supported by the majority of the Working Group and likely amenable to the industry, others—the adoption of new technology and issuing decisions in a more timely fashion, for example—could prove challenging to the ASRC’s limited budget and staff.