Self-Regulation

The advertising industry has no real Code of Ethics or Code of Professional Conduct. This is largely because advertising is a profession of communication, and communication is protected by the First Amendment. While other professions can adopt a Code that is enforceable by law, any attempt to license or otherwise legally enforce an ethical code for advertising would run afoul of free speech guarantees.

The closest thing to an Advertising Code of Ethics is the Code of Advertising adopted by the Council of Better Business Bureaus (CBBB). That code applies to all Better Business Bureau members.

The CBBB also serves as the administrative parent of the advertising industry’s system of self-regulation. Industry self-regulation was developed in 1971 by the three major advertising industry trade associations – the American Association of Advertising Agencies, the Association of National Advertisers, and the American Advertising Federation – along with the CBBB.

The System includes:

(1) The National Advertising Division (NAD) of the CBBB, which looks for truth and accuracy in national advertising. NAD reviews advertising in response to complaints by consumers and local Better Business Bureaus. It also accepts challenges brought by competitors, which make up about half of the NAD caseload. These companies generally are seeking quick resolution from experts, while avoiding litigation. NAD chooses which cases it will open based on the merits of each case. Upon reviewing the evidence, NAD may recommend the advertiser modify or discontinue an advertising practice if the facts merit such recommendation.

(2) The Children’s Advertising Review Unit (CARU), which examines national advertising directed at children under 12, and privacy practices at websites directed to children under 13. CARU also pre-screens advertising to assure that it is consistent with CARU’s guidelines before it reaches the marketplace.

(3) The Children’s Food and Beverage Advertising Initiative (Initiative), a pledge program developed for food and beverage companies. Companies participating in the Initiative account for more than 2/3 of all television advertising directed to children. This Initiative was launched in 2007.

(4) The Electronic Retailing Self-Regulation Program (ERSP), which examines direct-response advertising, including infomercials, home-shopping channels and e-mail advertising. ERSP was founded in 2004.

(5) The National Advertising Review Board (NARB), which serves as the appeals body for NAD and CARU cases. NARB is made up of 70 professionals from three different categories: national advertisers (40 members), advertising agencies (20 members) and individuals representing the general public (10 members). For each appealed case a panel of five – three advertiser members, one agency member, and one public member – hears the evidence and renders a decision.

Participation in the advertising industry system of self-regulation is voluntary. However, advertisers that either refuse to participate or decline to comply with the terms of an NAD, CARU, ERSP or NARB decision may be referred to the appropriate government agencies (e.g., FTC, FDA) for additional review.