The Bottom Line
- The 2025 NAD Conference highlighted regulatory and self-regulatory priorities – including AI use.
- As the state and federal regulatory environment continues to evolve, companies can look to NAD guidance to inform compliance.
- The FTC is and will continue to be an important backstop to NAD’s authority.
The National Advertising Division (NAD) is the self-regulatory adjudicative body for the advertising industry. We attended and participated in NAD’s annual conference, which focused on the current state of the advertising industry, with discussions spanning from the impact of Generative AI technologies to the shift in federal regulatory priorities.
FTC Outlook
FTC Commissioner Mark Meador and FTC Director of the Bureau of Consumer Protection Christopher Mufarrige spoke at the conference. Meador opened his remarks with a quote from Leviticus and explained that he views the FTC’s mission as one of protecting consumers from morally and ethically deceptive conduct. He is particularly focused on issues that impact American families (such as money-making or business opportunity scams) and children (especially as technologies like AI are quickly evolving).
Meador emphasized the need for Congressional action to permit the FTC to obtain financial redress for violations of Section 5 of the FTC Act, despite noting that the Supreme Court’s decision in AMG (which took away this ability) was properly decided. He also commented on the Eighth Circuit vacating the FTC’s Click to Cancel Rule, expressing support for the policy underlying the Rule and disappointment with the Khan-era FTC for failing to properly conduct rulemaking. It remains to be seen whether the FTC will try to resurrect the Rule. Regardless, Meador emphasized that addressing deceptive conduct remains an enforcement priority for the current FTC, and the agency will utilize all available enforcement tools.
Mufarrige’s remarks were consistent with Commissioner Meador’s framework. He criticized the prior FTC for enforcing laws “the way we wish them to be” and explained that the current FTC will “stay in its lane” and not impose unnecessary regulations that stifle innovation. He set out a vision where the “scalpel of enforcement,” as opposed to the “sledgehammer of aggressive regulation,” is used to address enforcement priorities, including AI frauds and scams.
Mufarrige noted that the current FTC wants to review prior guidance, such as the Health Products Compliance Guidance and the Green Guides. However, he emphasized that guidance is merely instructive and does not have the force of law. He indicated that while we are likely to see considerably less rulemaking over the next few years, there are instances where a new rule is necessary. These rules are expected to be narrower in scope, potentially industry-specific, and some proposed rules may be rolled out in the next 6-12 months.
In response to a question, Mufarrige made clear that the FTC supports the mission of NAD. The FTC will continue to support NAD as it has in the past by taking referrals from NAD in compliance challenges. This affirmation of support is an important element of NAD’s role and effectiveness in the marketplace.
Key 2025 NAD Cases
NAD provided an overview of the most frequently challenged areas in 2025, noting that telecommunications remained the most frequent challenge category, followed by health-related products and cosmetic/personal care products. With respect to monitoring actions (which are brought independently by NAD), one of the most challenged categories is clothing, largely due to challenges concerning influencer marketing.
NAD did a deep dive into important recent decisions in key areas, including:
Claim Substantiation
- In Coterie Baby (The Diaper), NAD reviewed testing provided by the advertiser and the challenger that used a slightly different methodology. Most notably, the challenger’s testing used an automatic robotic arm while the advertiser’s testing involved a human lab technician. NAD ultimately determined that the human lab technician could have impacted the testing (as there was some leaking of the test liquid) and ultimately found the automated testing method more reliable.
- In Essor Group (Boka Oral Care Products), NAD reviewed certain product efficacy claims that were based on a number of studies. These studies did not test the challenged products, looked at different dosages, ingredients, and concentrations than those in the product, and presented other methodological issues. NAD concluded that, even though there were many studies, the lack of a single well-controlled clinical study rendered the challenged claims unsupported.
Industry Group Challenges
NAD highlighted three cases brought by industry groups against market disruptors.
- In Boxed Water is Better (Boxed Water), NAD determined that a “92% renewable” claim based on a mass-balance accounting did not align with reasonable consumer expectations and recommended modification.
- In Caraway (Nonstick Cookware), NAD found that the advertiser’s health-related and environmental benefit claims about its own offerings were supported, but claims about traditional nonstick cookware were not sufficiently supported.
- In Certified Angus Beef (Beef Quality Assurance), NAD found that claims of “best” practices and “highest” standards for a certification program were supported, largely because the certification was based on peer-reviewed standards.
Claim Interpretation
- In Vrbo (Short Term Vacation Rentals), NAD determined that a “host-free” claim could, in the context of the challenged advertising, reasonably be interpreted to communicate that hosts are always present in Airbnb rentals, when that is not necessarily the case.
- In Guideline (401K), NAD found that a “#1 Retirement Partner” claim had two reasonable interpretations, looking at two different metrics. Because advertisers are responsible for all reasonable interpretations of their claims, NAD recommended modification to clarify the claim.
Major Product Categories
- NAD discussed cases concerning health-related products, including GLP-1s and IV Drips, where the advertiser voluntarily agreed to discontinue the challenged advertising. While NAD did not reach a decision on the merits in these cases, NAD emphasized that these actions are “wins” for consumers and the industry, as potentially misleading claims are now out of the marketplace.
- NAD heard a number of cases concerning emerging technologies. Using its independent monitoring authority, NAD brought challenges against major technology companies regarding the advertised benefits of AI products and services.
Considering the Impact of AI
The impact and use of AI technologies was discussed throughout the conference. Discussions primarily focused on how to translate the existing advertising law framework to AI technologies, as highlighted by several recent NAD monitoring cases:
- In AI-Pro.org (AI-Pro.org), NAD applied its rules regarding claims that may mislead consumers about the source or nature of the product itself, and recommended that the advertiser make clear that its service was not the same as ChatGPT or OpenAI.
- NAD reviewed product performance claims in Google, LLC (Google Gemini), where a video showing AI capabilities overstated actual abilities.
- In Apple Intelligence, NAD determined that claims about certain AI features that were not available at launch required a disclosure.
- In Microsoft 365 Copilot and Samsung Bespoke Refrigerators, NAD found that limitations on the functionality of an AI service/feature required disclosure.
AI is continuing to be integrated into products and services, and is being utilized by advertising agencies, in-house creative teams, and legal teams. As AI adoption grows, companies must ensure that they fully understand how AI is being used and are proactive in identifying and addressing potential issues.
Presentation by Supergood
NAD invited a highly regarded AI native advertising agency to present to the attendees. The goal was to educate the audience on the many different uses of Generative AI in advertising, including strategy development, competitor analysis, campaign guidance, and creative development and production.
Most importantly, Supergood discussed how similar to past technology innovations such as the rise of the internet, digital media, and social media, we are at a critical moment in time. The adoption of Generative AI by businesses and consumers, along with platform development, will revolutionize almost all industries.