NAD Decision Suggests Expansive Definition of Advertising
As part of its routine monitoring program, NAD asked ACT to provide substantiation for statements the company made online about its standardized college entrance test. NAD was concerned about whether ACT sufficiently disclosed the likelihood of cancellations due to COVID-19 and statements about test center availability. The decision is interesting because it sheds light on what NAD considers to be an ad and how NAD finds cases.
At the start of the inquiry, ACT’s website stated that test centers may “occasionally” cancel tests due to unforeseen circumstances. NAD seemed to be concerned that the statement minimized the possibility of cancellation, when cancellations were more widespread. During the inquiry, ACT updated its site to make the potential for cancellations more clear, and it provided instructions to test takers about how they would be notified of cancellations.
NAD was also concerned that some of the test centers listed on the ACT site were not able to administer tests due to COVID-19. Although ACT took steps to remove centers that weren’t available, NAD recommended that ACT do more “to avoid conveying a misleading message about the availability of test centers.” For example, NAD suggested “clearly and conspicuously disclosing information about test center availability and [ACT’s] process for reconfirming availability.”
NAD only has jurisdiction over “national advertising.” Are statements that test centers may “occasionally” cancel a test or that a center is open ads? According to NAD, they could be. The term “national advertising” generally encompasses commercial messages that have “the purpose of inducing a sale or other commercial transaction.” NAD noted that the messages at issue were advertising because “the information is posted to induce the consumer to register for the test, which is a “sale or other commercial transaction.”
NAD’s interpretation of “national advertising” is arguably broader than what many advertisers would expect, but it’s something to keep in mind, especially as you communicate with customers about how you are dealing with disruptions due to COVID-19. Try to make sure that you clearly describe how your locations and services may be affected, and give some thought to how you can minimize unpleasant surprises.
This case is also interesting because it may provide some clues as to how NAD finds cases. The decision mentions that “complaints about large-scale ACT test center closures during the pandemic were widely reported,” and cites articles in the Washington Post and Forbes. NAD also notes that “a search of ACT’s Facebook pages revealed numerous frustrated parents who noted that centers that were listed as available for registration were closed.”
As we’ve noted before, it make sense to monitor complaints and act on them quickly before they turn into more formal problems.