The National Advertising Division of the Better Business Bureau (“NAD”), the investigative unit of the advertising industry’s system of self-regulation, recently referred advertising claims made by Nectar Sleep, LLC for its Nectar Mattress to the Federal Trade Commission (“FTC”) after Nectar Sleep failed to respond to the NAD’s request to provide substantiation for its claims.
Competing mattress manufacturer Tuft & Needle, LLC brought an NAD action and challenged Nectar Sleep’s advertising claims, arguing that Nectar Sleep’s express claims (“LIMITED OFFER: $125 Off + 2 Free Pillows”) and implied claims (Nectar Mattress was previously sold at a higher price; Nectar Sleep’s pillows are available for purchase) were false and misleading to consumers. Tuft & Needle contended that Nectar Sleep’s advertising is intended to create an urgent incentive for consumers to purchase a Nectar Mattress, when in fact, there is no sale, as the advertised price point is always available to consumers.
Despite repeated efforts by the NAD, Nectar Sleep failed to provide a substantive response to NAD’s request for support for the challenged claims or to participate in any way in the self-regulatory process. As a result, NAD referred the matter to the FTC for possible enforcement action.
Takeaway: As we previously blogged, advertisers should be aware that their failure to meaningfully participate in an NAD action or comply with a self-regulatory decision by the NAD may lead the case to be referred to the FTC for enforcement action.