One maker of insect-control products (United Industries Corporation) challenged claims made by another maker of similar products (The Scotts Company) at the NAD. Among the issues in the challenge was a sweepstakes that Scotts had run to help generate reviews of its products. As part of the sweepstakes, every consumer who submitted a review would get a chance to win a $25 Visa gift card. Although the sweepstakes rules required consumers to disclose that a review was submitted as part of a sweepstakes, that requirement was apparently not mentioned in the ads or call-to-action. According to the challenger, within two days of announcing the sweepstakes, hundreds of favorable reviews appeared on the Scotts website, none of which included the required disclosure.
According to the NAD decision, when Scotts became aware that consumers were not including the proper disclosure, the company took several corrective steps. For example, Scotts included the disclosure requirement in its ads, as opposed to only in the rules. Moreover, the company directed its agency to apply a “Sweepstakes Entry” tag to each review and placed a disclosure on its website where the customer reviews were displayed while the agency completed its tagging. Scotts also reported that it was exploring solutions to have the disclosures applied automatically in the future. The NAD noted that it found the company’s efforts to address the issues to be “sufficient and proper.”
There are a few notable statements in the NAD’s decision. First, the NAD noted that the chance to win a prize in exchange for a review provided “a level of engagement and a connection between the consumers and the advertiser that is not expected and must be disclosed.” The FTC has articulated a similar position. Second, the NAD noted that “simply including the disclosure requirement in a link containing the Official Rules was not effective.” Apparently, few people read that disclosure, so a more prominent mention was necessary. And third, the NAD noted that an advertiser has an “obligation to ensure its sweepstakes rules are followed and to ensure that there is a sufficient and timely disclosure that reviews are incentivized.”
This is not the first case we’ve mentioned dealing with incentivized reviews, and it probably won’t be the last. The FTC and regulators have been focused on this issue for years. This case demonstrates that now companies also need to be worried about being called out by their competitors.