Advertising Disputes: National Advertising Division Process

Disputes in advertising can be voluntarily resolved through a dispute resolution mechanism championed by the National Advertising Division (NAD). NAD is a division of the Council of Better Business Bureaus that handles voluntary dispute resolution for claims about false and misleading advertising. NAD proceedings are often used by either consumers who otherwise would band together and initiate a class action lawsuit, and competitors that have concerns about how a company is advertising a product or service.

NAD proceedings are a voluntary undertaking, and no damages are awarded at the resolution of the matter. Furthermore, NAD decisions are not binding on the courts. Rather the NAD issues decisions on the disputes that are heard, and the parties are provided detailed guidance based on the law on how to resolve the matter. Failure to abide by a decision of the NAD can result in a referral being made for the Federal Trade Commission to investigate the disputed advertising claim.  

The NAD reviews a wide variety of advertising disputes, challenges and claims. A few examples of advertising claims that are appropriate for the NAD include:

• Disputes concerning product performance claims.
• False or misleading advertising in the form of superiority claims against competing products.
• Disputed advertising based on scientific or technical claims.
• Disputed comparative advertising claims.

The NAD does not handle matters concerning specific language used in an advertisement or on the packaging or label of a product. The NAD is also not the appropriate venue for advertising disputes based on what is in good taste, whether an advertisement for the sale of a product is moral, or disputes based on political or issue-based advertising. The NAD further has the discretion to refuse to hear disputes involving highly-technical details of a product, or advertising claims that appear to lack merit.

Why Choose NAD Proceedings Over Litigation in Court?

NAD proceedings are often preferred over litigation in court because the NAD process is faster and easier for everyone involved. NAD proceedings are also more affordable, which is something that fiscally responsible companies like very much about using NAD as a vehicle for resolving advertising disputes. The NAD may recommend that advertising be discontinued, or modified to more accurately reflect the truth. Even though the NAD decisions are not legally binding decisions, it is estimated that the NAD has a 95% compliance rate when it comes to the recommendations that are made by the NAD.  

A Lawyer Can Be Helpful for NAD Litigation

Having an experienced advertising law attorney on your side as you go through the NAD process can be hugely beneficial. The individuals who will ultimately be rendering the NAD decision in your case are employees of the NAD, many of whom are seasoned advertising attorneys. It is immensely beneficial to have an experienced advertising lawyer prepare your NAD case. Give yourself every opportunity for success and work with an advertising lawyer on your advertising dispute before the NAD. Contact one of the lawyers at Revision Legal today and see how we can help you resolve your advertising dispute. Contact us using the form on this page or call us at 855-473-8474.

Initiating an NAD Challenge: The Procedural Framework

For a company facing a competitor’s misleading advertising campaign, the NAD offers a structured path to resolution that is faster, less expensive, and less adversarial than federal litigation. Understanding the procedural mechanics of an NAD challenge helps companies decide whether the NAD is the right venue and how to build the strongest possible case.

Who Can File and How

Any party with a legitimate interest in truthful advertising can initiate an NAD challenge, including competitors, trade associations, and consumer groups. The challenger submits a complaint to the NAD identifying the specific advertising claims at issue, the evidence showing the claims are inaccurate or misleading, and the relief requested (typically discontinuance or modification of the challenged advertising). The complaint is not filed in court and does not require service of process—the NAD notifies the advertiser directly.

The advertiser then has the opportunity to respond, providing substantiation for the challenged claims. The challenger may submit a reply. In some cases, the NAD convenes a hearing at which both sides may present arguments. The NAD typically renders a decision within four to six months of the initial complaint—far faster than federal court litigation, which often takes two to four years to reach trial.

The Substantiation Standard: What Advertisers Must Prove

The central inquiry in most NAD proceedings is whether the advertiser can substantiate the challenged claims. The FTC’s substantiation doctrine—which the NAD applies—requires that advertising claims be supported by “a reasonable basis” at the time the claim is made. For objective claims (Product X is 30% faster than Product Y), the reasonable basis typically requires testing evidence. For comparative claims, the testing must meet certain methodological standards: it must be well-controlled, peer-reviewed where appropriate, and the results must support the specific claim made.

The NAD’s substantiation standard is applied prospectively as well as retrospectively—the advertiser must have had substantiation before the claim ran, not just at the time the NAD challenge is filed. An advertiser who cannot produce pre-existing substantiation for a claim is in a weak position regardless of what evidence they may develop after the fact.

NAD Decisions and Compliance

NAD decisions take the form of written recommendations: the NAD may recommend that advertising be discontinued, modified to more accurately reflect the evidence, or cleared as substantiated. Advertisers who accept NAD recommendations and implement them are in a more favorable position with the FTC, which views NAD compliance as relevant to its enforcement priorities.

Advertisers who decline to comply with NAD recommendations face referral to the FTC for potential enforcement action. The FTC takes these referrals seriously—the NAD’s substantiation analysis provides the FTC with a detailed factual record that streamlines its own investigation. The practical consequence is that a company that “wins” an NAD proceeding by refusing to comply may find itself defending an FTC enforcement action with significantly higher stakes.

NARB Appeals: The Next Level of Review

Either the challenger or the advertiser may appeal a NAD decision to the National Advertising Review Board (NARB), the appellate body within the BBB’s self-regulatory program. NARB panels consist of five members drawn from advertising professionals, consumer advocates, and representatives from the academic community. NARB appeals are heard on the record developed before the NAD and typically result in either affirmance or modification of the NAD decision.

NARB proceedings are rare—most NAD decisions are accepted by the parties—but they provide an important check on NAD reasoning and create precedential guidance on advertising standards. For cases involving significant advertising expenditures or novel legal questions about claim substantiation, an NARB appeal may be warranted.

When to Choose Litigation Instead of NAD Proceedings

Despite its advantages, the NAD is not always the right venue. Federal court litigation under Section 43(a) of the Lanham Act is preferable when: (1) you need emergency injunctive relief to stop the advertising immediately—NAD proceedings take months, not days; (2) you are seeking monetary damages, which the NAD does not award; (3) the advertiser has a pattern of ignoring NAD decisions, making referral to the FTC the more direct path; or (4) the advertising involves criminal conduct or fraud that requires law enforcement involvement.

For companies that need a fast, cost-effective resolution of an advertising dispute without escalating to full litigation, the NAD remains the best available mechanism. Contact the advertising law attorneys at Revision Legal to evaluate your options. Reach out today.