- National Advertising Review Council
NARC Type Trade organization Industry Advertising Founded 1971 Headquarters United States Website http://www.NARCpartners.org
The National Advertising Review Council (NARC) is the American advertising industry's self-regulatory body. NARC was established in 1971 by the American Advertising Federation (AAF), the American Association of Advertising Agencies (AAAA), the Association of National Advertisers (ANA)and the Council of Better Business Bureaus (CBBB). In 2009, the NARC Board of Directors was expanded to include the chief executive officers of the Direct Marketing Association (DMA), Electronic Retailing Association (ERA), and Interactive Advertising Bureau (IAB). The 11-member Board sets policies and procedures for advertising industry self-regulation. The CBBB provides third-party oversight of the self-regulatory system.
The self-regulatory system includes three investigative units and an appellate unit:
- The National Advertising Division of the Council of Better Business Bureaus
- The Children’s Advertising Review Unit
- The Electronic Retailing Self-Regulation Program
- The National Advertising Review Board
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 self-regulatory system also includes a special program – The Children’s Food and Beverage Advertising Initiative – developed in 2006 to examine food advertising directed to children.
National Advertising Division of the Council of Better Business Bureaus (NAD)
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
- 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 (Procedures) 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.
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.
Children's Advertising Review Unit of the Council of Better Business Bureaus (CARU)
CARU 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). 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.
CARU's Self-Regulatory Guidelines are deliberately subjective, going beyond the issues of truthfulness and accuracy to take into account the uniquely impressionable and vulnerable child audience.
The Guidelines are based upon the following core principles:
- Advertisers have special responsibilities when advertising to children or collecting data from children online. They should take into account the limited knowledge, experience, sophistication and maturity of the audience to which the message is directed. They should recognize that younger children have a limited capacity to evaluate the credibility of information, may not understand the persuasive intent of advertising, and may not even understand that they are being subject to advertising.
- Advertising should be neither deceptive nor unfair, as these terms are applied under the Federal Trade Commission Act, to the children to whom it is directed.
- Advertisers should have adequate substantiation for objective advertising claims, as those claims are reasonably interpreted by the children to whom they are directed.
- Advertising should not stimulate children’s unreasonable expectations about product quality or performance.
- Products and content inappropriate for children should not be advertised directly to them.
- Advertisers should avoid social stereotyping and appeals to prejudice, and are encouraged to incorporate minority and other groups in advertisements and to present positive role models whenever possible.
- Advertisers are encouraged to capitalize on the potential of advertising to serve an educational role and influence positive personal qualities and behaviors in children, e.g., being honest and respectful of others, taking safety precautions, engaging in physical activity.
- Although there are many influences that affect a child’s personal and social development, it remains the prime responsibility of the parents to provide guidance for children. Advertisers should contribute to this parent-child relationship in a constructive manner.
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.
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
- Before and After Photographs
- 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.
National Advertising Review Board
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. I an NAD or CARU decision is appealed, a five-member NARB panel is chose to review the decisions. All NARB decisions are published.
Children's Food and Beverage Advertising Initiative
The Initiative is aimed at shifting the mix of advertising messaging directed to children under 12 to encourage healthier dietary choices and healthy lifestyles.
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,”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.
By 1972, the NAD had received or initiated 444 complaints and was struggling against a continuing tide of criticism. 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.”
- ^ Klein, Sheldon,“Is NAD the Right Forum For You?” Arent Fox, LLP.
- ^ Clifford, Stephanie, " Best Soup Ever? Suits Over Ads Demand Proof", The New York Times, New York 22 November 2009. Retrieved on 2010-06-27
- ^ Clifford,Stephanie, " Notice Those Ads on Blogs? Regulators Do To", The New York Times New York, 10 August 2009. Retrieved on 2010-06-27
- ^ Latimer, Hugh; Kuzin, John, " The NAD: A Primary Forum For Resolving Advertising Disputes", Metropolitan Corporate Counsel, New York, 1 January 2009. Retrieved on 2010-06-27
- ^ Ensha, Azadeh, "Dell Calls ‘Green’ MacBook Ads Misleading",The New York Times, New York, 19 June 2009. Retrieved on 2010-06-27
- ^ Stevenson, Seth, "How New is 'New?' How Improved is 'Improved?' The People Who Keep Advertisers Honest", Slate Magazine, 12 July 2009. Retrieved on 2010-06-27.
- ^ Klara, Robert, “The Plug Stops Here”, Brandweek Magazine, New York 31 October 2009. Retrieved on 2010-06-27.
- ^ The Children's Online Privacy Protection Act of 1998 (COPPA) is a United States federal law, located at 15 U.S.C. §§ 6501–6506 (Pub.L. 105-277, 112 Stat. 2581-728, enacted October 21, 1998).
- ^ http://www.caru.org/guidelines/guidelines.pdf
- ^ The Children's Food and Beverage Advertising Initiative (CFBAI).
- ^ Eric J. Zanot
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