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

Transcription

1 Self-Regulation: Does It work? Can it Work? Presented to the George Mason University Attorneys General Education Program Arlington Virginia April 30, 2011 C. Lee Peeler President, National Advertising Review Council EVP, National Advertising, CBBB

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3 Example: National Advertising Division Jurisdiction: Truth and Accuracy of National Advertising All media All Commercial Advertisers

4 Key Areas of Interest Product-performance claims Functional foods Dietary Supplements Green marketing Telecommunications

5 How NAD Process Works Complaint or staff monitoring Request to advertiser for substantiation Review of evidence

6 All decisions are reported in a press release and published in the NAD/CARU Case Reports. Public Decisions

7 The FTC would Like to acknowledge The National Advertising Division Of the Council of Better Business Bureaus for their referral related to this case. Non-Compliance? Maker of Oregano Supplement Agrees to Pay $2.5 Million to Settle FTC Charges

8 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

9 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

10 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 childdirected 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

11 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

12 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 Include a shortfall nutrient or food group to be encouraged Do not include a shortfall nutrient or food group to be encouraged 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)

13 CARU Limit 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

14 ERSP Advertising Police Arrive Inside Second Life By 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.

15 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.

16 Alcohol Advertising Programs Distilled Spirits Council Beer Wholesalers Wine Institute

17 BBB System Founded in 1912 Over 120 local BBBs Nationwide

18 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

19 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.

20 Industry Total Complaints Rank by number of complaints Percentage increase over 2009 Percentage of Resolved Complaints Television - Cable, CATV & Satellite Cellular Phone Services & Equipment 30, % 98.6% 27, % 92.1% Auto Dealers - New Cars 24, % 87.4% Banks 22, % 98.5% Collection Agencies 15, % 80.2% Auto Dealers - Used Cars 14, % 70.6% Auto Repair Service 13, % 65.6% Furniture - Retail 13, % 79.1% Internet Shopping 12, % 61.4% Mortgage Brokers 9, % 81.0%

21 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, 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.

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