A wide range of regulatory agencies monitor business activities, investigate alleged violations, and bring civil actions against companies they believe have committed unlawful acts. Many businesses designate executives or managers as compliance officers, in the hopes of identifying and preventing regulatory violations before they become actionable. Companies in some industries create separate organizations to serve as watchdogs over their members. Self-regulatory organizations offer the benefit of keeping official regulators at something of a distance, but their reliability depends on vigorously fulfilling their purpose. One example is the Advertising Self-Regulatory Council (ASRC), which has several divisions monitoring different aspects of the advertising business. One of these, the National Advertising Division (NAD), monitors national advertising campaigns to look for false or misleading claims and other deceptive practices. If it is unable to resolve a claim, it may refer the matter to a government agency. This recently happened with a company based in Northern California, which was accused of failing to disclose fees to consumers. The NAD referred the claims to the Federal Trade Commission (FTC).
The ASRC was founded in 1971 as an alliance between two advertising trade organizations and the Council of Better Business Bureaus (CBBB). Originally known as the National Advertising Review Council (NARC), the organization changed its name to the ASRC in 2012. The NAD conducts investigations based on its own monitoring of truth and accuracy in advertising, and it also receives claims of false advertising from competitors and consumers. In addition to the NAD, the ASRC has divisions monitoring advertising directed at children and various forms of online advertising. The National Advertising Review Board hears appeals of decisions made by the other divisions.
The FTC is a federal agency charged with enforcing multiple statutes dealing with consumer protection. The agency was created by the FTC Act of 1914, 15 U.S.C. § 41 et seq., which contains many of the provisions the FTC enforces. The statute prohibits numerous anti-competitive, deceptive, fraudulent, and otherwise unfair business practices. This includes the dissemination of “any false advertisement…for the purpose of inducing…the purchase in or having an effect upon commerce, of food, drugs, devices, services, or cosmetics.” Id. at § 52(a). The FTC is authorized to seek injunctive relief preventing the further dissemination of allegedly false advertising, and to bring suit for damages. Liability under these provisions is limited to a “manufacturer, packer, distributor, or seller” of a good or service, instead of an advertising agency or broadcaster. Id. at § 54(b).