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Brand Protection & Advertising

Stay ADvised: Brand Protection & Advertising Law News

07.19.23
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In This Issue:

World's No. 1 Meat Manufacturer's "Net Zero" Claims Aren't All Hogwash, But They're Not Exactly Substantiated, NARB Concludes

Claims that the world's largest producer of animal meat and protein products will achieve "net zero" emissions by 2040 are unsupported, concluded the National Advertising Review Board (NARB) in its decision upholding the National Advertising Division (NAD)'s recommendations. Among other things, JBS communicated the following in its marketing "JBS is committing to be net zero by 2040."

In the original decision, the Institute for Agriculture & Trade Policy (IATP) challenged JBS's net zero claims, and NAD concluded that the challenged claims communicated misleading messages and should be discontinued. NAD noted the Federal Trade Commission (FTC)'s Green Guides disfavor such unqualified general environmental claims. These types of claims convey a "wide range of meanings," and marketers are unlikely to be able to substantiate all reasonable interpretations.

NAD found that JBS's claims, which appeared on its website, on social media, and in traditional print media, communicated that the company was on track to have net zero emissions by 2040, Although JBS argued that its claims were merely aspirational in nature. But according to NAD, "aspirational environmental benefit claims create reasonable expectations on the part of consumers and, as a result, they require substantiation."

NAD concluded that the claim "net zero by 2040" is a recognized scientific standard that conveys to a reasonable consumer the message that the company is already "acting toward specific objectives and measurable outcomes that would enable its operations to have net zero impact on the environment by 2040." Though the evidence showed that JBS had taken certain steps towards this goal, it wasn't enough to indicate that the company had "formulated" and implemented a "credible plan" to reach net zero by 2040.

Similarly, on the claim that JBS had a "Global Commitment to Achieve Net-Zero Greenhouse Gas Emissions by 2040," NAD reasoned that the company's substantiation fell short because it had failed to provide evidence that it had a plan in place to address "Scope 3" emissions—those emissions associated with suppliers and end-users. The same could be said of the claim "Bacon, chicken wings and steak with net zero Emissions. It's possible." The "it's possible" portion of the claim conveyed a certainty not backed up by an actionable plan.

NAD also analyzed the claim, "Leading change across the industry and achieving our goal of net zero by 2040 will be a challenge. Anything less is not an option," which had appeared in a New York Times advertisement. JBS argued that it supported this claim because it was committed to leading change in the industry as the number one animal protein producer. Though NAD saw merit in that argument, it reasoned that the statement "anything less is not an option" conveyed the unsupported message that JBS was already making concrete efforts to achieve its goals.

Finally, JBS had claimed that "SBTi" (Science Based Targets Initiative), a body that sets standards for reaching zero emissions, "recognized the net zero commitment of JBS." To support this claim, JBS pointed to a public dashboard reporting on the company's commitments and to a letter JBS sent to SBTi to set forth the "commitment." But NAD concluded that this evidence fell short of substantiating the message conveyed that SBTi "had reviewed and approved JBS's net zero goals and objectives underpinning its commitment to have net zero impact on the environment by 2040."

On appeal to the NARB, JBS argued that although its net zero advertising is aspirational, it had made sizeable progress towards that goal, taken steps in line with industry standards, and that these efforts amounted to an "operational plan," contrary to what NAD had found.

IATP countered that "net zero" is a recognized concept from the Paris Agreements that requires "deep emissions cuts" and that JBS was nowhere near on track to meet this goal as it "emits more greenhouse gasses than entire nation-states such as Spain." Even the company's aspirational claims "still generate consumer expectations," which aren't backed up by a "credible" plan, added IATP.

The NARB agreed—both with IATP and with the prior NAD decision. First, NARB echoed NAD's assessment of the FTC Green Guides guidance on unqualified claims that "tend to overstate environmental benefits." NARB further agreed with NAD that the claims communicated the unsubstantiated message that JBS is already implementing a plan with a "reasonable expectation of achieving 'net zero' by the year 2040."

Likewise, NARB found that JBS had failed to provide sufficient scientific support to show that the net zero goal was feasible, especially in light of the Scope 3 emissions, which IATP said accounted for 90% of overall emissions.

JBS argued that 2040 is 17 years into the future, a fact which would cause consumers to have lowered expectations of JBS's current progress towards that goal. However, NARB noted that the 17-year period was a question of substantiation, not consumer expectation. Further, consumers—and even most savvy business executives—were unlikely to have the insights to interpret the advertising as communicating anything other than a "feasible goal," but JBS had failed to show that it could meet the goal.

Key Takeaways

This case is an important addition to the group of NAD cases clarifying, over and over again, that good intentions are not enough in the ESG world. For aspirations to form the basis for claims, they must be backed up both by concrete action and a concrete underlying plan.

Ticketmaster Steps Up Compliance With DAA Principles for Targeted Ads, Makes Changes to Website

Ticketmaster worked with the Better Business Bureau National Programs' Digital Advertising Accountability Program (DAAP) to amend its website to address its handling of targeted advertising.

The DAAP is the self-regulating arm of the digital advertising world. It monitors websites and mobile apps for compliance with digital advertising best practice principles governing interest-based advertising (IBA), better known as targeted ads.

In this case, DAAP reviewed the Ticketmaster website following a consumer complaint and found Ticketmaster's website was not compliant with the DAA's Transparency Principle.

In response, Ticketmaster conducted a comprehensive review to strengthen its compliance protocols and ensure they comply with the DAA Principles. Specifically, Ticketmaster:

  • Updated its primary website footer to add a "prominent and conspicuous link" titled "Ad Choices" to its website, which leads to a page containing all the required elements of the enhanced notice: "(1) a description of Ticketmaster's third-party IBA practices, (2) a link to the DAA industry-developed AppChoices and WebChoices opt-out tools, and (3) a statement of adherence to the DAA Principles."
  • Incorporated changes to reflect Enhanced Notice through its Consent Management Platform (CMP) by providing additional links to third-party opt-out tools and disclosure of third-party interest-based advertising. The link to the CMP is accessible from all web pages on the Ticketmaster domain.
  • To meet first-party enhanced notice requirements, committed to updating its secondary website footer by changing the existing "Manage My Cookies" link to read "Manage My Cookies and Ad Choices." DAAP will continue to monitor this change until it is made.

Key Takeaways

To comply with DAAP requirements, websites that allow third parties to collect their users' data for targeted advertising purposes must provide a "clear, meaningful and prominent link" to a description of their interest-based advertising activities and opt-out tools, as well as a statement of adherence to the DAA principles.

Publishers Clearing House to Pay $18.5 Million to FTC Over Use of Dark Patterns

Perhaps the most widely known name in the world of contests and mailers—Publishers Clearing House (PCH)—has agreed to pay $18.5 million to settle Federal Trade Commission (FTC) charges it used so-called "dark patterns" to mislead consumers into repeatedly visiting its site and purchasing products.

Known for its ubiquitous envelope mailers urging recipients to sign up for free sweepstakes, PCH also operates its sweepstakes online. The FTC complaint alleges that PCH deliberately tailored its website as a web of deceptions and confusions to mislead consumers into thinking they had to make a purchase to enter the sweepstakes, which PCH is required by law to allow consumers to participate in for free.

The FTC's complaint alleged that PCH set up its website like a purgatory of repetitive ads, each of which promised to be the last step before consumers could finally sign up for the sweepstakes for free ... only to lead to yet another step. According to the complaint, when consumers first navigated to PCH's homepage, they were presented with an "Official Entry Form" or "Official Entry Registration Form," which contained a call-to-action button such as, "Submit Entry!," "WIN IT!," or "Win for Life!" PCH, however, did not enter consumers into a sweepstakes when they entered their personal information and hit the call-to-action button. Instead, consumers were directed to PCH's e-commerce site, where consumers had to click and scroll through several webpages of advertisements for products, after which consumers were presented with another call-to-action button where they could finally submit their entry. After those consumers entered the sweepstakes, PCH subsequently sent them emails representing that they must complete another step to claim a prize number on the "winner selection list" or to be eligible to win the sweepstakes. Yet these emails merely redirected consumers to PCH's e-commerce site where they yet again had to navigate through a series of webpages with advertisements for products.

These "dark patterns" were designed "to deceive consumers into believing that they must order products before they can enter a sweepstakes or that ordering products increases their odds of winning a sweepstakes," said the FTC.

Other dark patterns abounded throughout the customer experience, alleged the FTC. These included using trick wording conflating the words "ordering" with "entering," "bombarding" customers with emails that misrepresented to consumers that if they did not act in response to the emails, they would be ineligible to win or disqualified from winning the sweepstakes. The FTC also averred that PCH deliberately made any disclosures tough to read and find, typically in small light colored font that blended into the background.

The complaint also averred that PCH engaged in additional deceptive marketing tactics: including sending emails referencing fictitious forms and documents starting with the letter "W" followed by a hyphen and a number or a "W" followed by a number, the same naming convention used by the IRS on federal tax forms, allegedly to induce consumers to open the emails; concealing the cost of orders; failing to disclose shipping charges; calling purchases "risk free" without disclosing to customers that if they wanted to return merchandise to PCH, they must do so at their own expense, and until January 2019, falsely claiming that PCH does not sell customer data.

The complaint alleged that this egregious pattern of misrepresentations violated the FTC Act and the CAN-SPAM Act.

In addition to the monetary component, the settlement obligates PCH to put in place a number of measures intended to stop its deceptive marketing tactics, including ceasing deceptive statements about purchases and sweepstakes, making clear disclosures, separating sweepstakes from sales, and stopping surprise fees and emails.

Key Takeaways

The FTC continues to pursue so-called dark patterns wherever it may find them—making clear that such practices envelope far more than traditional automatic renewal plans. Businesses of all shapes and sizes should take heed.

NAD Continues to Closely Watch Editorial Content It Fears Is Advertising

NAD recently provided additional guidance to even traditional media companies seeking to bolster views for celebrity-rich content. The National Advertising Division (NAD) cautioned yet again that editorial content can be advertising when influenced by economic motivation but found that in this case Dotdash Meredith had acted within the lines.

In its self-monitoring capacity, NAD inquired about statements made by Dotdash Meredith for a recommendation piece about Biossance Squalane & Marine Algae Eye Cream, which appeared in InStyle, a Dotdash Meredith brand. The express claim was: "This Reese Witherspoon-Approved Eye Cream Hydrates and Brightens. Shoppers say it fades fine lines 'almost immediately.'"

The NAD was concerned that the statements blurred editorial and advertising content. The article appeared in an MSN search result, which was advertising, though it looked like magazine editorial content. Further, Reese Witherspoon's status as Biossance brand ambassador was not clearly and conspicuously disclosed.

While stopping short in this case of handing down a recommendation to discontinue or amend the claim, NAD recommended that Dotdash Meredith "evaluate its business relationships with brands or products about which it is writing and determine whether the content is advertising or editorial and, if it is advertising, to label it is as such."

NAD referenced its recent decision in Smile Prep, in which it found that the mere prospect of affiliate revenue impacted the site's editorial process, and the fact that the editorial staff was aware of potential affiliate relationships meant the recommendation copy constituted commercial speech. NARB in that cases agreed with NAD that the editorial review site's content was advertising even if not specifically directed by an affiliate because of the "material financial relationship between Smile Prep and its aligner partners."

NAD echoed NARB and cautioned Dotdash "that editorial content can become advertising when it is 'influenced by an economic motivation to persuade readers to purchase products through affiliate links that generate affiliate marketing commissions.' To the extent a digital publisher creates content that is influenced by its affiliate marketing relationships, the content is advertising. Similarly, if content is created because of the affiliate relationship, the content is promotional and is advertising."

In arriving at its decision, NAD also emphasized (as it has in the past) that consumers rely on many kinds of sources to make purchasing decisions. Much of this content from influencers and endorsers is monetized through affiliate links, though often consumers find it difficult to distinguish between what is and is not advertising.

Key Takeaways

NAD, in step with the FTC and its recently updated Endorsement and Testimonial Guidance, continues to explore the line between independent reviews and those that constitute advertising and require disclosure. Media companies are not immune from NAD (or FTC) scrutiny, albeit NAD's recent decisions travel more deeply into what has been considered editorial territory than ever before.

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