National Advertising Division Targets Celebrity, Influencer, and Third-Party Marketing in Recent Decisions

The National Advertising Division (NAD) recently issued a series of decisions addressing influencer and third-party marketing. The NAD is a self-regulatory body that assesses the truth and accuracy of claims made in national advertising and refers matters to the Federal Trade Commission (FTC) if an advertiser refuses to comply with its decisions.

Influencer’s Lash Claims

NAD reviewed videos posted on social media featuring a teen influencer self-described as a brand ambassador for the cosmetic company NuOrganic. The influencer made express and implied claims about NuOrganic’s eyelash serum, including “naturally grown long lashes” and “safe for young eyes.” NuOrganic argued that it could not control statements made by the influencer, but that it does monitor posts for content that may violate its guidelines. However, NAD investigated and identified certain Instagram posts where NuOrganic and the influencer had tagged each other about the same product, making substantially similar claims. NAD concluded these posts lacked the disclosures needed to inform viewers about the material connection between the influencer and NuOrganic. NAD recommended that the company take immediate steps to discontinue the videos containing the unsupported claims.

Battle of the Hot Tubs

Jacuzzi, a hot tub company, filed a challenge against its competitor, Bullfrog, for superiority claims made by Bullfrog’s third-party dealers, such as “Bullfrog Spas is the leader in energy saving technology.” NAD determined that Bullfrog’s comparative superiority and energy saving claims were not supported. Although Bullfrog claimed that it informed the third-party dealers that the statements were not authorized by Bullfrog and requested that the dealers remove the statements, NAD nonetheless held Bullfrog responsible for the truth and accuracy of those claims. NAD requires that once a company becomes aware of third-party advertising making inaccurate or unsupported claims about its product, it should take immediate and effective steps to discontinue the claims.

JP Morgan Chase Claims Their Influencer Is Too Famous for Material Disclosures

NAD examined whether a celebrity was required to disclose the material connections in advertisements for two companies. Both companies argued that disclosure explaining the material connection was unnecessary because of the celebrity’s long-standing relationship with the companies and that his followers were likely already aware of the connection. Unpersuaded, NAD determined that in evaluating the reasonable expectations of the audience, a significant minority of the audience might not be aware of the celebrity’s affiliation, because of varying levels of engagement with athletic brands, comedians, or celebrity endorsements.

Want to learn more about influencer marketing? RSVP and join the authors on March 27 for an in-depth webinar, #BadForTheBrand: What to Do When Your Influencer Goes Rogue, focusing on how companies can respond when an influencer upends the company’s expectations, the potential legal implications, and how companies can protect their brands when things go wrong.