Moberg Pharma filed a NAD challenge against Kramer Laboratories, Inc. regarding the name of Kramer’s nail product. Kramer’s “Fungi-Nail Toe & Foot” product competes in the market with Moberg’s “Kerasal Fungal Nail Renewal” product.  At issue was whether the name of Kramer’s product—Fungi-Nail Toe & Foot—implies that the product effectively treats toenail fungus.  The NAD can recommend a product name change if the name itself creates false or misleading messages to consumers.

According to Kramer, the product was developed to treat fungus on the skin around the nails, and the product’s name does not expressly claim to cure nail fungus.  The NAD disagreed, determining that the product name does, in fact, convey a clear message to consumers about the product’s performance and recommended, in part, that Kramer change the name of the product.

Despite the NAD’s recommendation, Kramer issued a statement that it would continue selling the product under the same name, as it had for 40 years prior to the decision (it did, however, agree to modify the brand and packaging for the product). In turn, the NAD referred Kramer’s claims to the Federal Trade Commission and the Food and Drug Administration.

TAKEAWAY: Advertisers should be aware that their failure to comply with a self-regulatory decision by the NAD may lead the case to be referred to the FTC or the FDA.