Stay ADvised: What's New This Week, December 9

Articles

• NAD Backs Industry-Standard Testing in Air Purifier Review: Sends Matter to FTC
• Reckitt Benckiser to Modify Air Wick Scented Oil Ads Following NAD Inquiry
• Australian Ad Standards Bans KFC “$4.95 Fill Up” Ad Based on Misimpression
• Plaintiffs Appeal General Mills Sugary Cereal False Ad Class Action Before 9th Circuit
• AdTech Company Suit Accuses Google of Monopolizing Ad Industry

NAD Backs Industry-Standard Testing in Air Purifier Review: Sends Matter to FTC

The National Advertising Division (NAD) has referred Guardian Technologies to the Federal Trade Commission (FTC) after the air purifier company said it would not comply with NAD’s recommendations that it cease making certain claims about its products.

The matter began when Guardian competitor Dyson Inc. initiated a NAD proceeding challenging certain of Guardian’s marketing claims, specifically, that its HEPA filters have the ability to “improve the air quality in your home and at work by capturing 99.97% of small, airborne particles like odor, mold and pollen.” It also claimed that the filters “reduce allergens while the new yellow frame helps you identify that it’s a GENUINE HEPA Guardian technologies replacement filter.”

After reviewing materials provided by Guardian in support of the challenged marketing claims, NAD determined the proffered information was insufficient to support the claims.

To substantiate its claims, Guardian relied on tests of its HEPA filtration system based primarily on two methods – a “salt based aerosol” method and a “polysterene microspheres” method. NAD determined that both methods deviated from industry standards and did not yield reliable or consumer-relevant test results, and, therefore, did not provide a valid basis for the challenged claims. NAD also opined that a third study provided by the company in support of its claims, called the “dust loading filtration study,” was equally unreliable to support the challenged claims. NAD accordingly recommended that Guardian discontinue the HEPA performance claims.

Guardian stated that it would not follow NAD’s recommendations. In its statement, the company sharply criticized NAD’s analysis, contending that the advertising industry’s self-regulatory arm had misinterpreted industry standards and disregarded expert testimony to reach erroneous conclusions.

Key Takeaways

This matter is instructive for advertisers facing a challenge before NAD. Advertisers that rely on studies that deviate from generally accepted industry standards for supporting marketing claims do so at their peril and must be prepared to present a compelling justification for doing so if challenged. Now that NAD has referred the matter to the FTC, the ball is in the Commission’s court as to whether it will pursue action against Guardian.

Reckitt Benckiser to Modify Air Wick Scented Oil Ads Following NAD Inquiry

Consumer goods giant Reckitt Benckiser has agreed to discontinue certain advertising claims touting the capacity of its Air Wick Scented Oil to reach every corner of a room following a challenge before National Advertising Division (NAD).

The challenged Air Wick ads, published on TV and social media, claimed that the product fills the entire room with fragrance: “You don’t live in one corner. Fragrance shouldn’t either,” narrated the advertisement. “Air Wick’s new technology releases fragrance upwards, unlike Febreze. So now, you can fill every corner with Fragrance.” Another claim marketed Air Wick Scented Oil as “The Only Scented Oil Warmer Designed to Fill Every Corner with Fragrance.”

Although the company made certain modifications to the ads in response to the challenge prior to NAD issuing its recommendations—namely, removing the comparison to Febreze and the word “only” from the advertisement—NAD still found the claims unsupported.

NAD found that even after the changes were made, the challenged ads still conveyed a “very literal message of performance based on the product’s design, namely that the product emits fragrance in an ‘upwards and outwards’ direction, allowing the fragrance to travel throughout the room and evenly fill the four corners, as well as the space in between.” This “broad superiority message” was not supported by the “limited” evidence provided by the company in support of the claims, failed to show that the specific direction the fragrance was emitted impacted product performance in any way, concluded the NAD.

NAD also concluded that nothing in the company’s submitted evidence demonstrated that its product design allowed the Air Wick fragrance to distribute across the room more evenly. Although the evidence showed the product did “release fragrance ‘upwards and outwards,’ tests of the product did not show that this resulted in an improvement in product performance such as the spread of the product across an entire room more evenly, as the company had claimed.

NAD also noted that the use of the word “new” in the claim conveyed a message that the product was superior to other products that “do not share its unique design,” which was not supported.

NAD recommended the company discontinue its claim that the product “is designed to fill every corner with fragrance” because the company’s tests provided in support of this claim were not “consumer relevant” given “that the test results may reflect a level of fragrance that was high enough to be detected by sensitive instruments, but at the same time too low to be perceptible to human consumers.”

But all was not lost for Reckitt: NAD okayed the company’s use of the claim “upwards and outwards” with respect to the product design.

Key Takeaways

As NAD has consistently communicated to the advertising industry, advertisers must possess airtight evidence to back broad superiority claims. Advertisers should take care to couch claims in such a way that they accurately communicate a product’s capabilities.

Australian Ad Standards Bans KFC "$4.95 Fill Up" Ad Based on Misimpression

Australian Ad Standards has banned a KFC advertisement in the country on the grounds that it deceptively advertised the time of day the fried chicken brand’s $4.95 “Fill Up” meal deal was available for purchase.

Ad Standards administers complaints brought under the rubric of the Australian Association of National Advertisers (AANA) and the self-regulating organization’s codes for advertisers. It examined the KFC ad after receiving a number of complaints about the ad.

KFC’s ad depicted a group of three women waiting to enter a nightclub after hours, who then skipped the club to take advantage of a KFC $4.95 “Fill Up” deal. The ad depicted an illuminated billboard referring to the offer and containing, in smaller print below it, the disclosure “Until 4 PM.” The next shot showed the women driving by the club in a car eating the KFC chicken.

The problem with the ad, claimed complainants and concluded Ad Standards, was that its storyline implied the deal was available at night, when in fact it was only available during the day. Complainants also noted the ad was promoted to people who “go to KFC in the late evening,” might be in a “vulnerable state due to alcohol consumption,” and “may be forced to purchase an equivalent product at a more expensive price.”

KFC argued to Ad Standards that its ad clearly stated on two occasions—on the aforementioned billboard and at the end of the ad—that the deal was available until 4 PM. Ad Standards disagreed, finding that the ad was nevertheless deceptive advertising in violation of Section 2.1 of the AANA Food and Beverages Advertising and Marketing Communications Code prohibiting misleading marketing communication for food because the “overall impression” of the ad was that the chicken deal would be available at night.

After Ad Standard upheld the complaints about the ad, KFC said it would comply with the organization’s decision.

Key Takeaways

To steer clear of advertising regulators, advertisers should focus on the overall impression presented by an advertisement and not rely solely on disclosures, however prominent they may be, if other aspects of the ad contradict or conflict with the deal details.

Plaintiffs Appeal General Mills Sugary Cereal False Ad Class Action Before 9th Circuit

Following dismissal of putative class action claims alleging General Mills falsely advertised its Honey Nut Cheerios cereal as healthy despite high sugar content, two plaintiffs have appealed the decision to the Ninth Circuit.

In dismissing plaintiffs’ claims, District Judge Jeffrey S. White of the Northern District of California noted that General Mills disclosed the actual sugar content of the products on the product labels and reasoned that plaintiffs cannot be deceived about the sugar content of cereals if such information is available on the product packaging. The court also rejected plaintiffs’ contention that General Mills’ marketing of its cereals as healthy (using terms such as a “great start,” “sustained energy” and “full and focused”) was deceptive, calling the statements “mere puffery.” Judge White dismissed the case without granting leave to amend, emphasizing that “there is no consensus about just how much sugar is healthy for consumption.”

In their appeal, plaintiffs Beverly Truxel and Stephen Hadley argued that the lower court misrepresented the issue as being about the sugar content information on the product labels when, according to plaintiffs, the focus of the complaint is General Mills suggesting that their cereals are healthy.

“By definition, increased risk for disease is unhealthy,” argued the plaintiffs. “It is therefore misleading to advertise as healthy a food that contains added sugar in a proportion significantly above five percent of the food’s calories.”

Plaintiffs also maintain that the claims are not puffery because they create a link between the nutritional content of the products and their health benefits.

As to Judge White’s finding that plaintiffs’ claims have no merit because they go beyond Food and Drug Administration (FDA) regulations and are preempted by federal law, plaintiffs have asked the Ninth Circuit to reconsider, noting that plaintiffs merely seek to enforce FDA regulations.

The case has been ongoing since plaintiffs filed their lawsuit in August 2016.

Key Takeaways

Similar suits have been filed against Post Foods and Kellogg’s (which settled its lawsuit recently for $20 million), perhaps in anticipation that the FDA would, in revising its food labeling guidance, identify sugar as an ingredient that does not support a “healthy” food claim. However, the FDA’s most recent guidelines issued in September 2016 focus on fats and nutritional content and make no mention of sugar. Accordingly, plaintiffs in cases like this may face a tough road.

AdTech Company Suit Accuses Google of Monopolizing Ad Industry

A recent suit filed by a small digital video advertising company alleges Google drove it and others out of the online advertising business by deliberately monopolizing a number of markets and stifling competition.

Atlanta-based online advertising company Inform, Inc. filed the lawsuit in federal district court in Georgia, accusing Google’s parent company Alphabet of violating antitrust law by engaging in business practices calculated to eradicate competition. Specifically, the complaint alleges violations of Sections 1 and 2 of the Sherman Act for illegal restraints on trade and maintaining a monopoly, and violations of the Clayton Act’s prohibition on exclusive dealing.

Inform alleges that despite posting revenues of upwards of $100 million between 2014 and 2016, it has struggled to stay in the ad-tech business because Google’s “pattern of anti-competitive practices has thwarted competition on the merits and excluded Inform and other Google competitors from the relevant markets,” resulting in decreased competition, harm to markets and consumers, and stifled innovation. The company claims Google’s actions “effectively put Inform out of business.”

According to the complaint, by acquiring strategic companies in the market such as YouTube, Android and DoubleClick, Google has achieved disproportionate and illegal shares of several markets—including a 94 percent share of the internet search market and an 80 percent share of the advertising business for search engines. This, argues plaintiff, constitutes a monopoly over services on which Inform and others in the online advertising business rely to stay in business.

The complaint also accuses Google of engaging in predatory business practices to maintain its market dominance and stifle competition, such as bundling services to make Google’s advertising services more attractive than those of other online advertising companies.

“The complaint we filed today demonstrates how Google’s predatory conduct effectively put Inform—and we believe multiple other digital advertising companies—out of business,” said counsel for Inform. “This is the exact type of behavior the antitrust laws were designed to address, and we are hopeful the court will do so.”

Google has not responded to the allegations as of this writing. In the meantime, plaintiffs seek treble damages and an injunction requiring Google and Alphabet to be split up into separate independent corporations.

Key Takeaways

Although Google maintains ad-tech is a “crowded field” replete with competitors, the company is under scrutiny at the Department of Justice for anti-competitive practices, and was recently assessed a multibillion dollar fine by European regulators over similar allegations. That, on top of an antitrust investigation by 50 U.S. attorneys general. In September, Google wrote a blog post defending its competitive spirit in response to a Reuters article in which ten ad industry executives discussed how they claim Google hurts competition in advertising, making many of the same arguments asserted in this litigation.