The failure to comply with National Advertising Division (“NAD”) review processes typically results in a referral to the Federal Trade Commission (“FTC”). This strong enforcement deterrent results in a reported 97% compliance rate with NAD decisions. Recently, NAD has been expanding the agencies to which it refers advertisers that have failed to comply with its rulings or participate in its processes. As discussed below, NAD recently referred the advertising claims of a crisis pregnancy center to the Massachusetts Attorney General for possible enforcement action. In addition, NAD has developed a referral relationship with leading social media platforms, such as Meta, resulting in prompt enforcement of NAD’s recommendations.
In a recent challenge brought by The Lawyering Project, a reproductive rights organization, NAD considered advertising claims made by Problem Pregnancy, a crisis pregnancy center. The subject claims include “Problem Pregnancy: Abortion Near Me,” and “Seeking abortion? Facing an unexpected pregnancy? We’re here to help.” While Problem Pregnancy provides pregnancy tests and counseling, it does not offer abortion or abortion referrals. The challenger commissioned a consumer perception study, which concluded that visitors to Problem Pregnancy’s website were “likely to be deceived about both the services and information they would receive from Problem Pregnancy.”
As in every NAD case, the advertiser was invited to respond to the challenge and participate in the self-regulatory process. NAD made repeated attempts to contact the advertiser, but Problem Pregnancy chose not to respond. Although failure to engage with an NAD challenge often results in a referral to the FTC, this case was referred to the Massachusetts Attorney General for possible enforcement action. NAD also sent the matter to the relevant social media platforms for review to determine if the claims comply with the platforms’ advertising policies.
NAD states that if an advertiser refuses to participate or comply with its recommendations, the matter will be referred to the appropriate regulatory agency, which is typically the FTC. Advertisers should be aware that failure to substantively respond to NAD challenges and comply with NAD recommendations can lead to enforcement action by Attorneys General or other regulatory officials. Moreover, NAD’s referral to social media platforms (such as Meta) reflects an expansion of NAD’s enforcement practices to include publishers, more akin to the UK’s Advertising Standards Authority or Brazil’s CONAR. With the commitment of Meta and other social media platforms to enforce their advertising standards in connection with NAD referrals, non-participatory advertisers may find themselves with not just an enforcement investigation, but the prompt cessation of its advertising on the social media platforms.
Takeaway: These new referral avenues serve as a reminder to advertisers to fully engage in NAD’s self-regulation process and comply with NAD recommendations or risk legal action and the removal of their social media advertising. Advertisers that have failed to take advantage of the self-regulation process, invariably learn to regret those decisions.
Author:
Andrew Lustigman
Olshan Frome Wolosky LLP
alustigman@olshanlaw.com
+1 212 451 2258
