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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