| Type | Trade organization |
|---|---|
| Industry | Advertising |
| Founded | 1971 |
| Headquarters | United States |
| Website | http://www.NARCpartners.org |
The National Advertising Review Council (NARC) is the American advertising industry's self-regulatory body. NARC was established in 1971 by the American Advertising Federation (AAF), the American Association of Advertising Agencies (AAAA), the Association of National Advertisers (ANA)and the Council of Better Business Bureaus (CBBB). In 2009, the NARC Board of Directors was expanded to include the chief executive officers of the Direct Marketing Association (DMA), Electronic Retailing Association (ERA), and Interactive Advertising Bureau (IAB). The 11-member Board sets policies and procedures for advertising industry self-regulation. The CBBB provides third-party oversight of the self-regulatory system.
The self-regulatory system includes three investigative units and an appellate unit:
Parties may appeal decisions reached by NAD and CARU to NARB, the appellate body. Decisions reached by the self-regulatory system’s investigative and appellate units are publicly reported through a press release. In addition, the decisions reported by NAD and CARU also are compiled 10 times each year into the “NAD/CARU Case Reports.” As of 2010, more than 5,000 self-regulatory decisions are included in the NARC Online Archive. The self-regulatory system also includes a special program – The Children’s Food and Beverage Advertising Initiative – developed in 2006 to examine food advertising directed to children.
The National Advertising Division (NAD) is charged with monitoring and evaluating truth and accuracy in national advertising. The NAD examines and evaluates a wide range of advertising claims, including puffery, consumer surveys, product testing and product demonstrations, taste tests, pricing claims and disclosures. Through its unique window on the marketplace, NAD identifies hot issues in advertising and promotion. NAD’s decisions assist advertisers in anticipating and responding to the challenges that new products and new media can pose.
Since its inception, NAD has examined advertising claims for a wide range of products, including:
In cooperation with the Council for Responsible Nutrition, NAD has expanded its review of advertising for dietary supplements, a nearly $25 billion industry that is frequently criticized for misleading advertising. To date, the program has issued nearly 100 decisions concerning claims made in dietary supplement advertising. On average, the NAD opens 150 cases each year and more than 95 percent of the advertisers that appear before NAD voluntarily comply with NAD's decisions.
NAD cases often originate through a challenge filed by one advertiser against the advertising claims made by a competing advertiser. In addition, NAD monitors national advertising and investigates complaints filed by consumers and advocacy groups or referred by local Better Business Bureaus. The course of NAD review proceedings is detailed in The Advertising Industry’s Process of Self-Regulation, Policies and Procedures by the National Advertising Review Council (Procedures) The Procedures describe and explain the filing deadlines and requirements for submissions from challengers and advertisers. NAD examines advertising to determine whether the evidence provided by the advertiser fully supports the advertising claims at issue in an NAD review.[1]
The NAD can be expected to make one of three determinations for every claim at issue.
Should an advertiser refuse to participate, NAD will to refer the advertiser to the appropriate regulatory agency. NAD’s findings are detailed in the final decision and outlined in a press release. In addition, NAD regularly monitors closed cases to ensure that advertisers comply with NAD decisions. If the NAD determines the advertiser made a reasonable attempt to comply, but there are still concerns outstanding, the NAD will work with the advertiser to address those concerns. Should the NAD determine that no effort was made to comply, or that the advertisers is unwilling to make further modifications NAD deems necessary, the Procedures allow the NAD to refer the advertiser to the appropriate regulatory agency. NAD cases are closely watched by national advertisers and by the advertising industry.[2][3][4][5][6][7]
CARU was established in 1974 by NARC for the promotion of responsible advertising to children under the age of 12 in all media. CARU reviews and evaluates advertising for truth, accuracy, appropriateness and sensitivity to children’s still developing cognitive abilities in accordance with its Self-Regulatory Program for Children's Advertising (the Guidelines), which hold advertisers to strict standards. CARU routinely monitors advertisements found in broadcast and cable TV, radio, children’s magazines, comic books, the Internet and mobile services for compliance with its Guidelines. When ads are found to be misleading, inaccurate or inconsistent with its Guidelines, CARU initiates an inquiry and examines the advertising to ensure compliance with the Guidelines. If an ad is found to be non-compliant, CARU seeks discontinuance or correction. The results of CARU inquiries are publicly recorded in the NAD/CARU Case Reports. CARU also handles advertiser challenges and consumer complaints. In 1996, CARU added a section to its Guidelines that highlight issues that are unique to the Internet including Websites directed at children under age 13 for online privacy. In January 2001, CARU's self-regulatory program became the first Federal Trade Commission-approved Safe Harbor under the federal Children's Online Privacy Protection Act of 1998 Children's Online Privacy Protection Act of 1998 (COPPA).[8] Participants who adhere to CARU's Guidelines are deemed in compliance with COPPA and essentially insulated from FTC enforcement action as long as they comply with program requirements.
CARU's Self-Regulatory Guidelines are deliberately subjective, going beyond the issues of truthfulness and accuracy to take into account the uniquely impressionable and vulnerable child audience.
The Guidelines are based upon the following core principles:
ERSP was developed by NARC at the request of the Electronic Retailing Association in 2004. The program provides a forum of the self-regulation of direct response advertising. ERSP was created in part to demonstrate the industry’s commitment to self-regulation and to provide a quick and efficient mechanism for review of high-profile advertising (such as weight-loss advertising). The direct response industry includes long-form (infomercial) productions, short-form commercials, live home shopping channels, print advertising, Internet marketing, cell phone advertising, broadband channels, and radio advertising. Anything that has a direct link to the marketer: either a 1-800 number, email, or website is within ERSP’s purview.
Core claims at issue in an ERSP inquiry might include:
Participants in an ERSP review can anticipate one of three results:
ERSP also refers marketers to the appropriate regulatory agency if they fail to respond or refuse to comply with ERSP’s findings. Compliance inquiries are also conducted to confirm compliance with ERSP recommendations.
NARB is the NARC appeals board. When an advertiser or challenger disagrees with an NAD or CARU recommendation, they may appeal the decision to the NARB for additional review. NARB is made up of 70 professionals from three different categories: National Advertisers Advertising Agencies and Public members made up of academics and former members of the public sector. NARB members are nominated for their stature and experience in their respective fields. I an NAD or CARU decision is appealed, a five-member NARB panel is chose to review the decisions. All NARB decisions are published.
The Initiative is aimed at shifting the mix of advertising messaging directed to children under 12 to encourage healthier dietary choices and healthy lifestyles.[10]
In the late 1960s and early 1970s, a new consumer-protection movement had found its voice and legislators and regulators were listening. In his academic monograph, “The National Advertising Review Board, 1971-1976,”[11]detailed the troubled commercial climate of the times: “Public opinion surveys of attitudes toward consumerism, business and advertising in the 1960s showed that early in the decade, the majority of studies reflected either positive or mixed attitudes toward advertising. In contrast, studies later in the 1960s and early 1970s reflected more negative attitudes toward advertising and a growing interest in consumerism. “During the same period, Congress passed a host of consumer minded bills, including ‘truth-in-packaging’ legislation, the National Traffic and Motor Vehicle Safety Act and the Public Health Cigarette Smoking Act that banned cigarette advertising from the broadcast media. “The executive branch of government was active as well. Presidents Kennedy, Johnson and Nixon all sent consumer messages to Congress. The position of special assistant to the President for Consumer Affairs, the Office of Consumer Affairs, the Consumer Advisory Council and the Committee on Consumer Interests were all established in that period.” Noted Zanot, “the sheer amount of consumer protection activity at the federal level during the 1960s and 1970s far surpassed that of any other period in U.S. history.” Leaders within the advertising industry were urging the development of a self-regulatory mechanism that could help calm what Zanot described as “a gathering storm of consumerism.”
In his monograph, Zanot reported that Howard Bell, then-president of the AAF American Advertising Federation and current chairman of the NARB, “became a catalyst in the development of new self-regulatory measures.” Zanot also excerpted a speech delivered in September 1970 by the late Victor Elting, Jr., then-chairman of the AAF, at a meeting of the Chicago Advertising Club. “There are ticking sounds that we hear in all the pressure groups, congressional hearings and other forums that are meeting to decide our fate. Let’s defuse them by having the strength and courage to determine our fate for ourselves,” Elting said. Eight months later, on May 13, 1971, Elting announced that the AAF, 4A’s, ANA, and CBBB has formed the NARC. NARC was charged with setting policies for the NAD and NARB.
By 1972, the NAD had received or initiated 444 complaints and was struggling against a continuing tide of criticism. By 1973, though, that criticism had begun to abate. As Zanot reported, the organization received an “unexpected boost” when |FTC Commissioner Mary Gardiner Jones, a consumer advocate, declared the system to be “a self-regulatory effort of truly historic proportions.”