- August 10, 2012
- Posted by: Seth Heyman
- Category: Marketing & Advertising Law
What if one of your restaurant’s customers lost 40 pounds in one month just by eating your sandwiches for lunch every day? No exercise, no other diet changes, just eating that sandwich seemed to make all the difference, which is strange because your regular customers seem to be getting fatter. Should you feature her story in your next ad campaign?
The Federal Trade Commission’s Endorsement Guides say otherwise. When describing a real life customer experience, advertisers must make it clear that (a) either the experience highlighted in the advertisement could be achieved by customers generally, or (b) the experience is specifically NOT typical of the experience other customers may have with the advertiser’s product.
The National Advertising Division of the Council of Better Business Bureaus (“NAD”) reviews factual claims made in national advertisements. When the statements made in such ads are challenged by competitors, the NAD offers a alternative dispute resolution service. When an ad is submitted to the NAD, the dispute can take as little as 90 days to resolve. The NAD recently addressed the issue of whether an advertiser can highlight a “one time experience” of a customer in an ad. The NAD was asked by IBM Corporation to review certain comparative advertising claims made by its competitor Oracle Corporation. IBM argued that the following claims made by Oracle in its advertising were misleading:
- “Exadata 20x Faster … Replaces IBM Again”
- “Giant European Retailer Moves Databases from IBM Power to Exadata … Runs 20 Times Faster”
Oracle argued that its advertisement was true, represented a customer case study, and that the sophisticated target audience would understand that the claims were based on the experience of only one customer.
The NAD disagreed. Relying on the FTC’s Endorsement Guides for guidance, NAD concluded that without additional qualifying information, and considering the context of the entire advertisement, one reasonable interpretation of the challenged ad was that all Exadata systems consistently perform 20 times faster than all IBM Power systems. The NAD also stated that even if consumers understood that the advertisement was based on the experience of one specific customer, it would still be problematic, because the use of a “case study” is no different than a consumer testimonial, and Oracle failed to demonstrate that the experience of the one customer – the “European Retailer” referenced in the challenged ad – is an experience that consumers can generally expect to achieve, as required by the FTC Endorsement Guides.
Where an advertiser features a one-time experience in an ad, regardless of whether that experience is completely true, the claim is considered utterly false unless the advertiser includes significant and clear disclaimers. If you use your formerly chunky customer in your ads, make certain consumers know that her results are far from typical.