BY JEFFREY D. KNOWLES AND GARY D. HAILEY Failure to Take NAD Seriously Proves a Costly Mistake for Marketer CHANNEL CROSSING: LEGAL Recently, the Federal Trade Commission announced that it had reached a settlement requiring the Oreck Corporation to stop making allegedly false claims that its Halo vacuum cleaner and ProShield Plus air cleaner could reduce the risk of flu and other illnesses by killing common germs and eliminating allergens. Oreck agreed to pay $750,000 to the FTC as part of the settlement. Buried near the end of the FTC press release announcing the settlement is a tidbit that should catch marketers’ attention: “The FTC acknowledges the National Advertising Division of the Council of Better Business Bureaus for its referral in this case.” The National Advertising Division (NAD) was created in 1971 to provide an alternative means of resolving disputes between competing marketers who might otherwise find themselves facing off in court. NAD proceedings are usually quicker, more private and less expensive than litigation. NAD is not a court or a government agency, and it can’t force marketers to comply with its decisions. If NAD decides that challenged advertising includes false or unsubstantiated claims, then it asks 50 electronicRETAILER | June 2011