A New NAD Case Reveals Limitations On Disclosure Use

Brands often use disclosures to ward off the specter of false advertising actions. And disclosures often do just that. But a recent NAD decision highlights that using a disclosure to spell out significant limitations is not always protective.

In a decision reviewing advertising by DREO, NAD found fault with a series of "No. 1" claims. DREO advertised itself as the "No. 1 Fan and Heater Brand in the U.S." across a variety of platforms. Lasko Products, a competitor, begged to differ.

Both parties understood that "No 1" claims must be based on sales data. That much was uncontroversial. The issue before NAD, however, was whether DREO could define the universe of competitors when making this "No. 1" claim. DREO backed its claims with sales data showing DREO to be "No. 1" when looking only to Amazon sales. DREO even called out its approach in a disclosure: "Stackline data for Amazon U.S. Retail Sales of Space Heaters from Jan. 2023 – Dec. 2023."