By John Hendrickson
What’s wrong with this online offer from Nectar Sleep for its Nectar Memory Foam Mattress?
For a limited time
Plus 2 free pillows & free shipping
According to Tuft & Needle in a recent challenge filed with the National Advertising Division (“NAD”), administered by the Council of Better Business Bureaus, at least two important items are misrepresented: (i) there is no savings of $125.00 because the mattresses are always available for purchase at the lower price point, and (ii) the pillows cannot lawfully be advertised as “free” because they are never offered for sale to consumers in the first place.
Tuft & Needle alleged that the offer language above gave rise to two related “implied claims:”
- that the Nectar mattress was previously sold at a higher price; and
- that the Nectar pillows are available for purchase.
But Tuft & Needle didn’t need to allege the existence of the implied claims in order to challenge the advertised offer. Long-standing Federal Trade Commission guidance and enforcement policy require that, when an advertiser makes a specific savings claim such as “$125.00 off any mattress,” the product must, in most cases, have been sold at the higher “regular price” during the most recent 30-day period in the trade area where the savings claims is made.
Further, with regard to “free” claims, the FTC requires that any material conditions to the offer be disclosed in the advertising materials, that any “regular” price referred to for the free item be the lowest price actually charged to consumers during the most recent 30-day period in which the product was available for sale, and that the free offer be discontinued within a reasonable time (i.e. six months) – the idea being that, if the product is always available for free, then it isn’t really “free” after all. Rather, the cost to the seller of the “free” product must have been incorporated into the price charged the consumer for the purchased product – thus the offer is deceptive.
Nectar refused to participate in the NAD proceeding, and so the matter was referred by NAD to the Federal Trade Commission for further handling. Notwithstanding the lack of a decision in the matter, the challenge by Tuft & Needle serves as a helpful reminder that, in addition to carefully vetting all of the product claims contained in advertising, marketers should carefully review the structure and content of their product offers to confirm compliance with applicable federal, state and – in some cases – local laws. Further, “free” claims and “savings” claims are subject to heightened scrutiny by regulators and therefore deserve special attention in the claims vetting process.