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7th Edition: Trends in Marketing Communications Law

NAD >> The NAD’s Need for Speed

October 6, 2020

The National Advertising Division (NAD) has become increasingly focused on the issue of speed, both in the context of advertising challenges regarding 5G technology and updates to the NAD’s procedures.

Claims Regarding 5G Technology: Telecommunications companies have begun touting the arrival of their 5G networks and the groundbreaking Internet speeds that these networks will provide consumers. In a pair of recent decisions, the NAD examined 5G advertisements from AT&T and Verizon and concluded that their 5G technology claims were either too fast (i.e., premature) or too furious (i.e., failed to prominently disclose material limitations).

First, the NAD examined AT&T’s claim that the network offered “5G Evolution, The First Step to 5G.” Of critical relevance to the NAD’s decision was the fact that AT&T’s “5G Evolution” network delivered 4G rather than 5G service. In an effort to address this disconnect, AT&T argued that “5G Evolution” is simply the name for its current 4G network, and that its use of the term “Evolution” conveys the more limited message that the company is in the process of upgrading its network to enable 5G performance. Unpersuaded, the NAD concluded that “5G Evolution, The First Step to 5G” referred to a level of technology — 5G — that AT&T could not deliver and, therefore, recommended that AT&T discontinue its claim.

Shortly thereafter, the NAD examined Verizon’s claim that it was the “First to 5G.” With respect to the claim itself, the NAD concluded that Verizon was the first carrier to offer 5G service (albeit in the context of a “small launch” in two cities). That said, the NAD also noted that “[c]onsumers generally assume that, if a service is being advertised to them, it is something that is available now.” Verizon’s 5G service, however, was not available across Verizon’s coverage area, or even a significant part of it. Accordingly, the NAD recommended that Verizon modify its advertising to clearly and prominently disclose the fact that its 5G service is “more unavailable than available.”

NAD’s Fast-Track Process: Not to be outdone by the telecommunications giants, the NAD recently introduced a “fast-track” challenge process that significantly increases the speed with which the organization resolves certain advertising disputes. Unlike the traditional NAD challenge process, whereby the NAD endeavors to provide a decision within 60-90 business days (with many challenges taking considerably longer to resolve), the fast-track process ensures that challenges are resolved within 20 business days.

While this increased efficiency is certainly attractive to potential challengers, the fast-track process is only available in certain, limited situations. Specifically, fast-track challenges must be limited to a single issue and cannot involve implied claims or claims that require complex substantiation (e.g., clinical studies or technical product testing). Moreover, the NAD fast-track process is reserved, at least initially, for specific claim categories, such as: misleading pricing and sales claims; misleading express claims; and insufficient disclosures (including disclosure issues in influencer marketing, native advertising and incentivized reviews). Despite these limitations, the fast-track process has proven popular with challengers, with six fast-track challenges having been resolved in the program’s first three months.

Key Takeaways:

  • Advertisers touting 5G technology — or any new technology — must ensure that the technology and corresponding benefits are currently available to consumers. If the technology is not widely available, this material limitation must be clearly communicated.
  • The NAD’s fast-track process promises to enhance the organization’s ability to efficiently resolve advertising disputes, and, in turn, make the NAD process more attractive to prospective challengers.