Self-Regulation: Does It work? Can it Work?

Presented to the George Mason University

Attorneys General Education ProgramArlington Virginia

April 30, 2011

C. Lee PeelerPresident, National Advertising Review Council

EVP, National Advertising, CBBB

Example: National Advertising Division

• Jurisdiction: Truth and Accuracy of National Advertising

• All media

• All Commercial Advertisers

Key Areas of Interest

• Product-performance claims

• Functional foods

• Dietary Supplements

• Green marketing

• Telecommunications

How NAD Process Works

• Complaint or staff monitoring

• Request to advertiser for substantiation

• Review of evidence

Public Decisions

All decisions

are reported in

a press release

and published

in the NAD/CARU

Case Reports.

Non-Compliance?Maker of Oregano Supplement Agrees to Pay $2.5 Million

to Settle FTC Charges

“The FTC would

Like to

acknowledge

The National

Advertising

Division

Of the Council

of Better

Business

Bureaus for

their referral

related to this

case.”

A Better Mousetrap

• Independent:Administered by an objective third party

• Transparent: The outcome of every case is publicly reported

• Accountable: Companies that refuse to comply are publicly identified and referred to the appropriate government agency

Children’s Food and Beverage Advertising Initiative

• 17 major children’s food and beverage advertisers

• Companies make public commitments about their child directed advertising

• Compliance with pledges monitored by CBBB

Changing the Landscape of Children’s Advertising

• Before (Pre-CFBAI) — Almost anything went regarding what was advertised– CARU Guidelines for how to advertise, but not

what to advertise• Few companies had nutrition standards for child-

directed advertising• No third party accountability on what was advertised

• Now — Science-based nutrition standards guide participants on what to advertise– BBB oversight provides transparency and

accountability– Program stimulates competition among

participants

Setting Standards →

Change & Improvement• ≥ 100 products changed or created to meet nutrition standards:

– Some products reformulated several times– Other products discontinued or no longer advertised

• Calories: – Virtually every individual product under 200 calories– No entrees/main dishes > 350 calories; No meals > 600 calories

• Sodium: – Pre-CFBAI some products with > 900 mg sodium– Now highest is 760 (most far less: FDA ―healthy‖ levels used by many)

• Sugars: – Pre-CFBAI some cereals had as much as 15 or 16 grams per serving– 21 of 25 cereals currently 10 grams or less per serving; limit is 12 grams

• Fats:– 2 grams or ≤ 10% calories sat fat; trans fat limits generally 0 g labeled – A number of products reformulated to lower fats to meet limits

• Positive Nutrients:– More fiber & Vitamin D (nutrients of public health concern in U.S.)– Whole grains usage has increased

Analysis of Ads on Sample of Kids’ TV

(Spring 2010)

• 87% of participant ads included 10% DV of a nutrient that is a shortfall in kids’ diets and/or ½ serving of F/V/D/WG

• 32% included ≤ 1/2 serving of veg/fruit– As a separate dish in a meal or as part of a

combination product (e.g., pasta)

• 33% included low/fat-free milk or yogurt

• 27% were for products or meals that provided ≤ 8 grams of whole grains– 8 grams a significant contribution to diet

(Dietary Guidelines for Americans 2010)

Include a shortfall nutrient or

food group to be encouraged

Do not include a shortfall nutrient or

food group to be encouraged

CARULimit amount shown being

consumed to labeled serving size

When showing meals make them

nutritionally balanced ones

Admonish against disparaging

healthy lifestyles choices, fruit and

vegetables

Depict snacks as such, not as

meal substitutes

ERSP

Advertising Police Arrive Inside Second LifeBy Jim Edwards |BNET

In a decision on a product advertised on billboards inside Second Life, the Electronic Retailing Self-Regulation Program (ERSP) found that PhotoBlocker Spray does not, unsurprisingly, make your real-life car invisible to police radar and traffic cameras.

Second Life is the online virtual world where unemployed people have fake sex and then get real-life divorces.

Principles for Online Behavioral

Advertising

The “Advertising Option Icon” and accompanying language should be displayed in or near online advertisements or on Web pages where data is collected and used for behavioral advertising.

The Icon indicates adherence to the Principles.

By clicking on the Icon, consumers will be able to link to:

– a clear disclosure statement regarding the company’s OBA data collection and use practices.

– an easy-to-use opt-out mechanism.

Alcohol Advertising Programs

• Distilled Spirits Council

• Beer Wholesalers

• Wine Institute

BBB System

• Founded in 1912

• Over 120 local BBBs Nationwide

The Journal of Consumer Affairs – Spring 2010

“The Better Business Bureau is the

third-party complaint agency most

commonly used by dissatisfied

customers who are unable to obtain

redress … .”

Are Consumers Disadvantaged or Vulnerable?

An Examination of Consumer Complaints

to the Better Business Bureau

Complaints to Better Business Bureau Up Ten

Percent Nationwide

According to an annual report released today by Better Business

Bureau, consumers filed 1.1 million complaints against North American

businesses in 2010, reflecting a ten percent increase over the previous

year.

IndustryTotal

Complaints

Rank by number of complaints

Percentage increase

over 2009

Percentage of Resolved Complaints

Television - Cable, CATV & Satellite

30,985 1 -5.0% 98.6%

Cellular Phone Services & Equipment

27,293 2 -29.6% 92.1%

Auto Dealers - New Cars 24,698 3 -8.1% 87.4%

Banks 22,648 4 -24.3% 98.5%

Collection Agencies 15,876 5 .5% 80.2%

Auto Dealers - Used Cars 14,520 6 6.1% 70.6%

Auto Repair Service 13,178 7 3.5% 65.6%

Furniture - Retail 13,018 8 -1.1% 79.1%

Internet Shopping 12,950 9 -39.8% 61.4%

Mortgage Brokers 9,545 10 17.8% 81.0%

Consumer Alerts

Weight-loss Berry Claiming Oprah Endorsement Makes Wallets Slim and Consumers Angry Warns BBB

Acai-berry product peddlers lock customers in after “free” trial expires

Arlington, VA – January 5, 2009 - Better Business Bureau is warning consumers to be wary of online ads relying on celebrity endorsements to sell acai-berry related weight loss products. BBB has received thousands of complaints from consumers nationwide who thought they were signing up for a free-trial offer of acai berry weight loss products that were supposedly endorsed by Oprah, Rachel Ray and other celebrities; in the end, the free trial cost them, month after month.

Thank you.

For more information, please visit us on the Web @

www.narcpartners.org

www.bbb.org