Thoughts from the National Advertising Division (NAD) Annual Conference, 2023

Katten Muchin Rosenman LLP

The annual legal conference for the National Advertising Division of the Better Business Bureaus National Programs (NAD) took place over two days this week in Philadelphia. The conclave was well-attended by the advertising bar and featured a variety of interesting content organized under the theme "What's New and What's Next." Highlights of the event were NAD's customary presentations and Q&A regarding NAD process and procedure and several engaging discussions of emerging subject matter areas of importance to the NAD and advertising law.

NAD touted its continuing focus on speeding up decisions, which includes the successful launch and expansion of the SWIFT track for simpler cases and its faster NARB appeal process, which has substantially cut the timeline for consideration and issuance of decisions on appeal. NAD also announced upcoming improvements to its press release and compliance challenge processes, which have been historically contentious subjects for industry.

Some trends in NAD decisions also emerged. NAD is an important decision-maker that tends to apply FDA and FTC policies in its decisions. Thus, even if an agency fails to take enforcement action, the NAD may provide an alternative remedy. NAD is also undertaking some of the more prominent, early reviews of ESG claims and may wind up creating "law" on claims support before the FTC revises its own Green Guides.

One of the last panels featured George Washington University Law Professor and luminary Bill Kovacic along with former FTC Commissioner Noah Phillips (now at Cravath). The panel discussed the ongoing impact of the Supreme Court's pair of decisions in AMG and Axon on the agency enforcement program. Professor Kovacic noted that the AMG decision, in particular, had a devastating effect on consumer fraud enforcement by making it harder for the FTC to get consumers' money back, even in cases of clear fraud. He noted the peculiar history of Section 13(b) (the law that the FTC had relied upon for its restitution authority before AMG: it was inserted as a floor amendment to the bill that created the Alaska pipeline in the 1970s). He also speculated that the FTC could lose all merger enforcement authority (with that going to the DOJ) within the next decade. Mr. Phillips was not as pessimistic in outlook, but he acknowledged that the agency faces choppy legal and political waters ahead. Both Kovacic and Phillips likened the present scenario to a hurricane just offshore, with the storm intensity and precise track as yet uncertain.

A day earlier, however, Consumer Protection Bureau Director Sam Levine gave a largely bullish summary of FTC activity, professing easy confidence in the agency's "Notice of Penalty Offense" strategy, whereby the FTC would sidestep AMG's impact by simply warning hundreds of companies of potential bad acts in advance of enforcement. I have written about this potentially dubious theory before

What seems clear is that industry has been emboldened to resist FTC investigations and demands, and it seems likely that many targets of FTC enforcement may assert various constitutional defenses that may find sympathetic ears in the courts.

The overall takeaway from the two days is that the NAD is here to stay and will continue to play an active, if not a leading voice, in advertising law policy. 

Our lawyers frequently handle NAD cases and can walk you through the ins and outs of potential NAD challenges.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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