Laura Brett became the director of the National Advertising Division in August 2017. Law360 published a Q&A session with special counsel Jennifer Fried and Laura Brett that provides insight into the NAD, what we can expect in the upcoming years, Laura’s approach as the NAD director, recent noteworthy cases, the NAD’s deliberative process, and much more. To read the interview, please click here.
The Senate Commerce, Science, and Transportation Committee held confirmation hearings yesterday for the four nominees to the Federal Trade Commission: Joseph Simons (nominated as Chair), Rohit Chopra, Noah Phillips, and Christine Wilson. We previously discussed the nominations of Simons, Chopra, and Phillips here. Wilson, currently a Senior Vice President at Delta Airlines and previously Chief of Staff to former FTC Chair Timothy J. Muris, was subsequently nominated to the fourth Commissioner seat.
The hearing touched on a range of consumer protection and antitrust issues from big data and interconnected devices to prescription drug pricing and the application of antitrust laws to big technology companies like Google and Facebook. As anticipated, the nominees generally affirmed their commitment to vigorously enforce consumer protection and antitrust laws but refrained from committing to particular policy positions or advocating specific legal interpretations on hot button issues.
One notable exchange occurred when Senator Cruz spoke about his time at the FTC under former Chair Muris in the early 2000s, when both Simons and Wilson also worked at the Commission as Director of the Bureau of Competition and Chief of Staff to Chair Muris, respectively. Cruz, Simons, and Wilson each spoke glowingly of Muris and his legacy at the Commission. Simons noted that the biggest lesson he learned from Muris was the importance of clearly articulating priorities to agency staff, calling it “an absolutely critical thing in terms of leading the FTC” and emphasizing that that he intended to do the same upon confirmation. Wilson praised Muris for enlisting other commissioners to help advance his agenda and noted that the multi-member composition of the Commission allows it to leverage the unique experiences and expertise of each commissioner.
While the multiple references to Muris’s tenure were framed primarily in terms of leadership philosophies, they may also signal a return to certain policy and enforcement positions taken by Muris. For example, under Muris’s leadership, the Commission continued to apply the longstanding “reasonable basis” standard when evaluating whether an advertiser had sufficient substantiation to support a claim. In more recent years, particularly in the area of health claims, the Commission advocated for more stringent substantiation standards that have typically only been required to approve new drugs, such as requiring two well-controlled clinical studies to support certain claims. Muris has been an outspoken critic of this development, characterizing it as “a significant ossification of a formerly flexible standard” in a paper co-authored with Dr. Howard Beales and Robert Pitofsky. The piece further argues that such “an arbitrary, inflexible standard would deny important information to consumers” and raise First Amendment concerns.
To be clear, the hearings didn’t touch on the approach to substantiation applied during Muris’s tenure directly, but the positive references could signal a return to a more flexible substantiation standard. It is also encouraging for advertisers that Simons indicated his intent to make clear agency priorities and standards, presumably signaling that the Commission’s position will be well communicated to industry.
The confirmation process is expected to move quickly. We’ll continue to monitor closely and post updates here.
More than a month after the retirement of former NAD Director Andrea Levine, the Advertising Self-Regulatory Council (“ASRC”) has announced NAD’s new Director: Laura Brett. Laura Brett, who has served as NAD’s Assistant Director since 2015, joined NAD in April of 2012. During her five years at NAD, Laura has authored several seminal decisions including NAD’s highly publicized 2015 DirecTV decision. She has also authored several monitoring decisions that deal with the intersection between social media and advertising law. (See, for example, NAD’s Kardashian and eSalon decisions.) Laura has spoken frequently about NAD and has earned a reputation for her strong judgment, rigorous analytical skills, and integrity.
The advertising industry’s self-regulatory system may be “voluntary,” but ignoring NAD’s recommendations—or declining to participate when asked—buys advertisers a prompt referral to the Federal Trade Commission. NAD often touts its close working relationship with the FTC. But what becomes of these referrals from the self-regulatory system? At NAD’s annual conference last month, Mary Engle, the FTC’s Associate Director for Advertising Practices, pulled back the curtain on the Commission’s treatment of referrals from NAD.
Engle noted that the FTC has received 50 referrals from NAD between January 1, 2011 and August 17, 2016. Not surprisingly, post-referral outcomes vary a great deal. In some cases, the FTC staff takes no action at all. Far more often, however, the FTC delves into NAD’s case file. Sometimes the Commission’s post-referral role involves urging advertiser back to NAD. Other times, FTC staff launches a formal investigation.
Looking back at referrals from NAD over the past five and a half years, Engle provided the following statistics:
- 22%: Company returned to NAD at the FTC’s recommendation
- 22%: Outcome unclear, or FTC staff decided to take no action
- 20%: FTC staff resolved the matter short of an investigation
- 14%: Matter remains under review by FTC staff
- 8%: FTC staff initiated a formal investigation, which it subsequently closed
- 8%: Matter related to existing FTC investigation/litigation
- 2%: Referral resulted in FTC law enforcement action
- 2%: FTC took no action because matter related to non-FTC litigation
The moral of Engle’s story? Don’t dismiss the self-regulatory body too quickly. Refusing to participate, or to comply with NAD’s recommendations, risks unwanted attention from the FTC.