Advertising Self-Regulatory Council

The self-regulatory system includes the following investigative, enforcement and appellate units:

• BBB AUTO LINE: a dispute resolution program that offers both mediation and arbitration to resolve business-to-consumer automotive warranty, lemon law, class action, and dealer manufacturer disputes.
• National Advertising Division (NAD): provides independent self-regulation and dispute resolution services. NAD reviews national advertising in all media and its decisions set consistent standards for advertising truth and accuracy.
• National Advertising Review Board (NARB): the appellate body for BBB National Programs’ advertising self-regulatory programs (NAD, CARU, and DSSRC). NARB’s panel members include 87 volunteer professionals from the national advertising industry, agencies, and public members, such as academics and former members of the public sector.
• Children’s Advertising Review Unit (CARU): the nation’s first Safe Harbor Program under the Children’s Online Privacy Protection Act, which helps companies comply with laws and guidelines that protect children from deceptive or inappropriate advertising and ensure that, in an online environment, children’s data is collected and handled responsibly.
• BBB EU Privacy Shield: an independent recourse mechanism (IRM) for the U.S. Department of Commerce Privacy Shield program. This independent, third-party dispute resolution program enables U.S. businesses to demonstrate that their trans-Atlantic data transfers are consistent with European data protection rules and is a recognized Independent Recourse Mechanism under Privacy Shield.
• Children’s Food and Beverage Advertising Initiative (CFBAI): a self-regulation program created to improve the landscape of food advertising to children. CFBAI works with leading food, beverage, and quick service restaurant companies to set and implement Uniform Nutrition Standards, which specify the science-based nutritional criteria for foods and beverages that can be advertised to children under age 12.
• Children’s Confection Advertising Initiative (CCAI): modeled after CFBAI, is a self-regulation program for small- and medium-sized confectionary companies created in partnership with the National Confectioners Association to help improve the landscape of food advertising to children. CCAI companies commit to not advertise confections to children under age 12.
• Direct Selling Self-Regulatory Council (DSSRC): provides independent, impartial monitoring, dispute resolution, and enforcement of false product claims and income representations made by direct selling companies and their salesforce members across digital platforms.
• Digital Advertising Accountability Program (DAAP): developed by the Digital Advertising Alliance (DAA) to enforce industry self-regulation principles for data privacy in online and mobile advertising, holding companies accountable to the DAA’s Privacy Principles. DAAP provides guidance to companies looking to comply with industry principles and responds to complaints filed by consumers about online privacy.
• Coalition for Better Advertising Dispute Resolution Program: an independent dispute resolution program for participants of the Better Ads Experience Program. The program helps enforce the Better Ads Standards, which identify optimal online advertising formats to create a better experience for consumers.
• Dispute Resolution Program for Verizon Wireless Customers: supports Verizon Wireless customers who need arbitration services for a dispute with Verizon Wireless of $10,000 or less. Before a customer can request arbitration, they must provide Verizon Wireless with written notice at least 30 days before arbitration is requested.

Parties may appeal decisions reached by NAD and CARU to NARB, the appellate body. Decisions reached by the self-regulatory system's investigative and appellate units are publicly reported through a press release. In addition, the decisions reported by NAD and CARU also are compiled 10 times each year into the “NAD/CARU Case Reports.” As of 2010, more than 5,000 self-regulatory decisions are included in the NARC Online Archive. The case reports and archive are not public, however; access to the archive is $6900.00 a year, even though procedures state that final case decisions are public.[3]

The National Advertising Division (NAD) is charged with monitoring and evaluating truth and accuracy in national advertising. The NAD examines and evaluates a wide range of advertising claims, including puffery, consumer surveys, product testing and product demonstrations, taste tests, pricing claims and disclosures. Through its unique window on the marketplace, NAD identifies hot issues in advertising and promotion. NAD's decisions assist advertisers in anticipating and responding to the challenges that new products and new media can pose.

Since its inception, NAD has examined advertising claims for a wide range of products, including:

• Products promoted as "green" or environmentally beneficial.
• Infant nutrition products
• Over-the-counter drugs and dietary supplements
• Consumer electronics
• Broadband technology
• Functional foods and beverages
• Cosmetics
• Building supplies and home repair and renovation products
• Energy services

In cooperation with the Council for Responsible Nutrition, NAD has expanded its review of advertising for dietary supplements, a nearly $25 billion industry that is frequently criticized for misleading advertising. To date, the program has issued nearly 100 decisions concerning claims made in dietary supplement advertising. On average, the NAD opens 150 cases each year and more than 95 percent of the advertisers that appear before NAD voluntarily comply with NAD's decisions.

NAD cases often originate through a challenge filed by one advertiser against the advertising claims made by a competing advertiser. In addition, NAD monitors national advertising and investigates complaints filed by consumers and advocacy groups or referred by local Better Business Bureaus. The course of NAD review proceedings is detailed in The Advertising Industry’s Process of Self-Regulation, Policies and Procedures by the National Advertising Review Council.[4] The Procedures describe and explain the filing deadlines and requirements for submissions from challengers and advertisers. NAD examines advertising to determine whether the evidence provided by the advertiser fully supports the advertising claims at issue in an NAD review.[5]

The NAD can be expected to make one of three determinations for every claim at issue.

• First, the NAD may find that the evidence provided by the advertiser fully supports or substantiates the claim under review.
• Second, the NAD may determine that the substantiation is not sufficient to support the advertising claims and recommend the claims be modified in current and future advertising to better reflect the evidence in the record.
• Third, the NAD may conclude that the evidence is wholly insufficient to support the claims. In that circumstance, the NAD will recommend that the advertising claims be discontinued.

Should an advertiser refuse to participate, NAD will to refer the advertiser to the appropriate regulatory agency. NAD's findings are detailed in the final decision and outlined in a press release. In addition, NAD regularly monitors closed cases to ensure that advertisers comply with NAD decisions. If the NAD determines the advertiser made a reasonable attempt to comply, but there are still concerns outstanding, the NAD will work with the advertiser to address those concerns. Should the NAD determine that no effort was made to comply, or that the advertisers is unwilling to make further modifications NAD deems necessary, the Procedures allow the NAD to refer the advertiser to the appropriate regulatory agency. NAD cases are closely watched by national advertisers and by the advertising industry.[6][7][8][9][10][11]

The Children's Advertising Review Unit was established in 1974 by NARC for the promotion of responsible advertising to children under the age of 12 in all media. CARU reviews and evaluates advertising for truth, accuracy, appropriateness and sensitivity to children's still developing cognitive abilities in accordance with its Self-Regulatory Program for Children's Advertising (the Guidelines), which hold advertisers to strict standards. CARU routinely monitors advertisements found in broadcast and cable TV, radio, children's magazines, comic books, the Internet and mobile services for compliance with its Guidelines. When ads are found to be misleading, inaccurate or inconsistent with its Guidelines, CARU initiates an inquiry and examines the advertising to ensure compliance with the Guidelines. If an ad is found to be non-compliant, CARU seeks discontinuance or correction. The results of CARU inquiries are publicly recorded in the NAD/CARU Case Reports. CARU also handles advertiser challenges and consumer complaints. In 1996, CARU added a section to its Guidelines that highlight issues that are unique to the Internet including Websites directed at children under age 13 for online privacy. In January 2001, CARU's self-regulatory program became the first Federal Trade Commission-approved Safe Harbor under the federal Children's Online Privacy Protection Act of 1998 Children's Online Privacy Protection Act of 1998 (COPPA).[12] Participants who adhere to CARU's Guidelines are deemed in compliance with COPPA and essentially insulated from FTC enforcement action as long as they comply with program requirements.

The Electronic Retailing Self-Regulation Program (ERSP) was developed by NARC at the request of the Electronic Retailing Association in 2004. The program provides a forum of the self-regulation of direct response advertising. ERSP was created in part to demonstrate the industry's commitment to self-regulation and to provide a quick and efficient mechanism for review of high-profile advertising (such as weight-loss advertising). The direct response industry includes long-form (infomercial) productions, short-form commercials, live home shopping channels, print advertising, Internet marketing, cell phone advertising, broadband channels, and radio advertising. Anything that has a direct link to the marketer: either a 1-800 number, email, or website is within ERSP's purview.[14]

Core claims at issue in an ERSP inquiry might include:

• Establishment Claims (“Clinically proven”)
• Performance Claims (how well a product performs)
• Testimonials (Anecdotal tales from consumers about their results with the product)
• Weight Loss Claims
• Health and Safety
• Disclosures
• Before and After Photographs
• Puffery
• Comparative Claims

Participants in an ERSP review can anticipate one of three results:

• ERSP determines that the core claims at issue are supported by reasonable evidence.
• ERSP recommends the marketer modify core claims.
• ERSP determines there is no support for the claims at issue and recommends that the advertiser pull the advertisement.

ERSP also refers marketers to the appropriate regulatory agency if they fail to respond or refuse to comply with ERSP's findings. Compliance inquiries are also conducted to confirm compliance with ERSP recommendations.

NARB is the NARC appeals board. When an advertiser or challenger disagrees with an NAD or CARU recommendation, they may appeal the decision to the NARB for additional review. NARB is made up of 70 professionals from three different categories: National Advertisers Advertising Agencies and Public members made up of academics and former members of the public sector. NARB members are nominated for their stature and experience in their respective fields. If an NAD or CARU decision is appealed, a five-member NARB panel is chosen to review the decisions. All NARB decisions are published.

The Accountability Program – the most recent self-regulatory program – was developed at the urging of a cross-industry coalition of trade associations. The Accountability Program reviews compliance with the industry-accepted principles for online behavioral advertising (OBA), focuses on transparency and consumer-control issues and monitors companies that may be engaged in OBA.

In the late 1960s and early 1970s, a new consumer-protection movement had found its voice and legislators and regulators were listening. In his academic monograph, “The National Advertising Review Board, 1971-1976,”[15] detailed the troubled commercial climate of the times: “Public opinion surveys of attitudes toward consumerism, business and advertising in the 1960s showed that early in the decade, the majority of studies reflected either positive or mixed attitudes toward advertising. In contrast, studies later in the 1960s and early 1970s reflected more negative attitudes toward advertising and a growing interest in consumerism. “During the same period, Congress passed a host of consumer minded bills, including ‘truth-in-packaging’ legislation, the National Traffic and Motor Vehicle Safety Act and the Public Health Cigarette Smoking Act that banned cigarette advertising from the broadcast media. “The executive branch of government was active as well. Presidents Kennedy, Johnson and Nixon all sent consumer messages to Congress. The position of special assistant to the President for Consumer Affairs, the Office of Consumer Affairs, the Consumer Advisory Council and the Committee on Consumer Interests were all established in that period.” Noted Zanot, “the sheer amount of consumer protection activity at the federal level during the 1960s and 1970s far surpassed that of any other period in U.S. history.” Leaders within the advertising industry were urging the development of a self-regulatory mechanism that could help calm what Zanot described as “a gathering storm of consumerism.”

In his monograph, Zanot reported that Howard Bell, then-president of the AAF American Advertising Federation and current chairman of the NARB, “became a catalyst in the development of new self-regulatory measures.” Zanot also excerpted a speech delivered in September 1970 by the late Victor Elting, Jr., then-chairman of the AAF, at a meeting of the Chicago Advertising Club. “There are ticking sounds that we hear in all the pressure groups, congressional hearings and other forums that are meeting to decide our fate. Let’s defuse them by having the strength and courage to determine our fate for ourselves,” Elting said. Eight months later, on May 13, 1971, Elting announced that the AAF, 4A's, ANA, and CBBB has formed the NARC. NARC was charged with setting policies for the NAD and NARB.[16]

By 1972, the NAD had received or initiated 444 complaints and was struggling against a continuing tide of criticism.[17] By 1973, though, that criticism had begun to abate. As Zanot reported, the organization received an “unexpected boost” when FTC Commissioner Mary Gardiner Jones, a consumer advocate, declared the system to be “a self-regulatory effort of truly historic proportions.”[18]

In 2012, the National Advertising Review Council (NARC), rebranded as the Advertising Self-Regulatory Council (ASRC). The new name and new brand were designed to offer an explicit statement about the mission and purpose of the organization—to advance the self-regulation of the advertising industry.[19]

• Advertising Self-Regulatory Council
• Electronic Retailing Association
• Direct Marketing Association
• National Advertising Review Council