In the Fast Lane: SWIFT at the NAD

What is the NAD?  What is SWIFT?

The National Advertising Division (NAD) is a self-regulatory forum for the advertising industry that monitors the transparency and veracity of national advertising and provides an alternative platform to federal district court litigation for industry players to challenge claims made by competitors.^[1]  The NAD handles approximately 150 cases each year, and challenges may be brought through one of three tracks: the Fast-Track (SWIFT), the Standard Track, and the Complex Track.  The NAD process provides for no discovery, participation is voluntary, and counterclaims are not permitted.  The NAD maintains a body of published case precedent, and parties can appeal the decision to the National Advertising Review Board (NARB).

In April 2020, the NAD launched its Fast-Track SWIFT process, allowing for expedited review of advertising challenges.  SWIFT, which stands for “Single Well-Defined Issue Fast Track,” is the fastest channel for claim resolution currently offered by the NAD.  The NAD promises a decision within twenty business days from the date a claim is filed via the SWIFT process.  SWIFT was created in response to a growing demand by advertisers to streamline the resolution of single-issue, more straightforward cases.  

What types of challenges can be brought through SWIFT?

A party may bring multiple claims in a SWIFT challenge, so long as there is a sole factual issue underlying all the claims.  To be eligible for SWIFT, single-issue challenges must be capable of resolution within twenty business days and thus cannot entail consideration of complex evidence.  As a result, implied claims, which usually require consideration of more complex evidence, are disfavored in SWIFT, and express claims are more likely to be accepted for review.  Specifically, the NAD has identified three categories of claims that are generally appropriate for resolution through SWIFT:  (1) challenges regarding the prominence or sufficiency of disclosures, including in influencer marketing, native advertising, and incentivized reviews; (2) misleading pricing and sales claims; and (3) misleading express claims that do not require review of complex evidence (e.g., consumer surveys, clinical trials, or other product testing).  Since the program was launched, ten cases have been decided through the SWIFT process, and all of them involved single-issue express claims.  The majority of the cases involved claims made on social media,^[2]and one involved a comparative pricing claim.^[3]  For example, in one case involving social media advertising, Function filed a challenge to the express claim PerSé Beauty made on its website (also appearing in Google search results) and on Instagram that Persé’s Prose haircare product had “over 192,000 5-star product reviews!”^[4]  Function argued that the 5-star claim should be discontinued because PerSé did not disclose all of its product reviews, but instead had been “cherry-picking” the most positive reviews, and because the reviews published were not based on initial satisfaction but rather the “Refine and Review” process through which customers could re-review the product after customizing it.^[5]  Based on Function’s arguments, and because PerSé introduced no evidence explaining how its reviews were collected, the NAD recommended that the 5-star claim be discontinued.^[6]                                            

The SWIFT pricing case involved Lidl challenging the following express claims that Aldi made on its website, billboards, social media, and in print:  “The Lowest Prices Everyday”; “Lowest Possible Prices on Groceries”; “It’s Official.  We Have the Lowest Prices on Long Island”; and “ALDI has the Lowest Prices on Long Island.”^[7]  After the SWIFT process began, Aldi agreed to permanently discontinue the challenged claims. 

Notwithstanding the NAD’s general directive that complicated evidence is ill-suited for SWIFT, one case brought through SWIFT last year involved a number of surveys both in support and in opposition to the advertiser’s claim that its infant formulas were the “#1 Pediatrician Recommended Brands.” See Abbott Nutrition (Similac Branded Infant Formulas), Report #6780, NAD/CARU Case Reports (August 2020).  There, the NAD agreed to review the pediatrician surveys provided by each side because neither party was challenging the reliability or methodology of the surveys.  Rather, the NAD determined that the advertiser had improperly combined the survey data for two different infant care products (“Similac” and “Elecare”), with distinct consumer bases, to support the statement that the two products were the #1 recommended brands by pediatricians.  Abbott thus suggests that there may be a narrow territory for survey evidence to be suitable for SWIFT:  when the methodology or the survey data are not at issue, but rather only the express claims based on the survey data. 

SWIFT Challenge Basics

To initiate a SWIFT challenge, a party must provide the challenged advertising with the date and platform on which the challenged claim appeared, a brief statement explaining why the challenged claim is appropriate for SWIFT, and arguments and exhibits to show the challenged claim is not substantiated. 

As soon as the challenge is filed, the NAD will determine whether the case can proceed in SWIFT, and if so, the NAD will send the challenge to the advertiser.^[8]  Upon receipt of the challenge, the advertiser has four business days to object to the challenge or the SWIFT process.  The advertiser’s failure to respond may result in referral of the challenged advertisement to the Federal Trade Commission.  If the advertiser objects to the SWIFT process, the NAD will typically decide that threshold issue in two days.  If, however, the advertiser consents to the SWIFT process, it must file its substantive response by day ten.  In support of the challenged claim, the advertiser must provide arguments and exhibits.  From days eleven to fifteen, the NAD holds party meetings at its discretion.  By day twenty, a decision is made and sent to both parties.  The time to comply begins from the day the decision is sent.  And if the NAD determines during the proceedings that the challenge is not appropriate for SWIFT, the NAD may close the case and transfer it to the Standard or Complex tracks. 

How Does SWIFT Compare to the Standard and Complex tracks?

Timing is of course the primary appeal of the SWIFT track.  A decision guaranteed within twenty business days is a far cry from four to six months typical for Standard and Complex tracks.  But this accelerated process comes at a premium.  Because the NAD dedicates staff to review the SWIFT cases within this expedited timeframe, the filing fees for SWIFT are somewhat higher than the Standard track fees, but still lower than the Complex track.  Overall, a year since its launch, SWIFT has proven to be an efficient and predictable fast-track process for dealing with single-issue, express claims, which do not involve review of complex evidence.  As the NAD and advertisers grow more accustomed to SWIFT, we may see an expansion of claims appropriate for SWIFT including, for example, cases involving implied claims or more complex evidence, but where the parties agree to stipulate to certain facts.

^[1]National Advertising Division, BBB National Programs, https://bbbprograms.org/programs/all-programs/national-advertising-division.

^[2]See Abbott Nutrition (Similac Branded Infant Formulas), Report #6780, NAD/CARU Case Reports (August 2020); Verizon Wireless (Verizon 5G Wireless Service), Report #6910, NAD/CARU Case Reports (December 2020); ALDI, Inc. (Aldi Groceries), Report #6962, NAD/CARU Case Reports (February 2021); Function Inc., Report #6938, NAD/CARU Case Reports (February 2021); PerSé Beauty Inc., Report #6992, NAD/CARU Case Reports (May 2021); Reckitt Benckiser, Report #7010, NAD/CARU Case Reports (June 2021).

^[3]See ALDI (Report #6962).

^[4]See Report #6992 at 1.

^[5] Id. at 2-3.

^[6] Id. at 3.

^[7] See Report #6962 at 1.

^[8]The NAD may determine that the case is not appropriate for SWIFT either at the start of the process when the challenge is made, or when the advertiser responds to the challenge.