Overview:
Federal courts and the NAD disagree on package disclosures and claims. How might advertising claim substantiation and market research protect brands from regulatory challenges?
The NAD, the FTC, and Courts
Marketers and advertisers use claims to sell products. Whether the claim is that a product is better than a competitor or certified sustainable, the exact wording of the claim can protect a brand or subject it to regulatory action. Some of the claims that frequently come before regulators include “natural” claims, “sustainable” claims, claims about environmental, social, and governance practices (ESG), and comparative claims.
The National Advertising Division (NAD) of the Better Business Bureau resolves conflicts using a voluntary process, in which two parties submit evidence and agree to adhere to the NAD’s ruling. The Federal Trade Commission issues guidance that courts follow, including disclosure guidelines that lay out rules for claims on consumer packaging. Lastly, courts may decide disputes about advertising or marketing, in the form of false or misleading advertising lawsuits.
Differences in Opinions
Although all three of these authorities regulate advertising, they can come to different decisions, even in similar cases. For example, a California plaintiff filed a false advertising lawsuit against Del Monte Foods, Inc, alleging that its packaging of fruit cups with the words Fruit Naturals on the front misled consumers. The fruit cups contained various allegedly unnatural additives, including citric acid, potassium sorbate, and sodium benzoate. The back of the package included the ingredients and disclosed these preservatives and flavor enhancers. The court ruled that reasonable consumers would not believe that Fruit Naturals contained all natural ingredients.
The NAD took a stricter approach with packaging and disclosures in a recent decision regarding the packaging of “sustainable” Quilted Northern toilet paper. As part of the NAD’s routine independent monitoring of truth and transparency in U.S. national advertising, it challenged sustainability claims made on the front, top, and bottom of the Quilted Northern packages. The front of the packaging included a broad claim that the toilet paper was made sustainably; the explanation of what “sustainable” meant was available on the company’s website. Ultimately, the NAD sustained claims that discussed planting trees, energy efficient manufacturing, real-life energy and water savings, and sustainability. However, the NAD ordered the company to adjust the placement of those claims.
Finally, the FTC offers guidance on packaging claims and how brands make disclosures across marketing channels. To prevent marketing and advertising communications from being misleading, according to the FTC, disclosures must be “clear and conspicuous.” However, what is clear and conspicuous varies with the context and can be the subject of many rulings. The FTC also considers whether a disclosure is small on the back or clearly stated on the front, as well as the subject matter of the claim. Disclosures clarify claims and can be used in combination with many other marketing communications.
How to Measure Marketing Communications and Launch Campaigns
Advertising claim substantiation, using properly conducted market research, is one of the best ways to prevent challenges to your advertising. Consumer surveys provide brands with research to support their claims, including potentially controversial sustainability claims, natural claims, comparative claims, and more.
MMR Strategy Group conducts advertising claim substantiation surveys to ensure that our clients’ marketing communications withstand regulatory challenges. If you would like to explore new claims, contact MMR Strategy Group.