Since 1971, the Council for Better Business Bureaus Inc. (CBBB) has administered the self-regulatory programs that operate under the umbrella of the Advertising Self-Regulatory Council (ASRC), including the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), the Council for Responsible Nutrition’s dietary supplement review program, the Interest-Based Advertising Accountability Program and the Electronic Retailing Self-Regulation Program (ERSP).
The U.S. Direct Selling Association (DSA) has a long and proud history of encouraging self-regulation of industry practices. Its comprehensive Code of Ethics was adopted in 1970, and the DSA Code Administrator administers it.
In December 2017 the FTC’s Acting Chairwoman Maureen Ohlhausen appeared before the DSA and challenged it to adopt a bolder self-regulatory posture. It was shortly after that when DSA began working with the CBBB to launch a new initiative to strengthen the direct selling industry’s self-regulatory programs.
The Acting FTC Chairwoman said that this new and more aggressive approach to self-regulation would benefit both DSA’s consumers and member companies by providing a more accountable and fair marketplace with lower compliance and regulatory costs than would be true under government regulation. There are also benefits to the government by allowing it to focus its limited resources on the most egregious practices and industry members.
We know these benefits because they have been the result of the programs we have developed for so many other industry groups. Each of these programs was adopted by leading industry groups faced with increased scrutiny by media, advocates, and the government. The advertising industry, the infomercial industry, the dietary supplement industry and the online behavioral advertising industry decided to step forward and take control of their own practices by adopting self-regulatory programs built around a robust set of proven standards:
- First, it is imperative that self-regulatory programs provide a fair and meaningful standard of review. The work at NAD, CARU, and ERSP centers on delivering industry members guidance on whether their practices meet legal and industry standards.
- The second critical component is independence. Program decisions are reached by expert attorney staff who evaluates advertising claims independent of any outside influence or consideration other than the party or parties’ evidence.
- Transparency is a critical element of these successful self-regulatory endeavors. All case decisions are announced and made available for the guidance of the industry. This transparency allows the public, advocates and the government to see the work, read the analyses and judge the program for themselves.
- CBBB self-regulatory programs are based on accountability. At the close of a NAD, CARU or ERSP inquiry, for example, advertisers are asked to provide a statement that they will comply with the recommendations, if any, included in the decision. If the advertiser declines to commit to the recommendations or is later found to be non-compliant, the matter will be referred publicly to the appropriate governmental agency.
- Finally, the decisions published by these programs apply to all industry members, not just members of supporting trade associations or businesses that agree to follow them. The reputation of an industry for truth and fairness is established by the industry as a whole, not just individual members.
Effective self-regulation demonstrates an industry’s commitment to marketplace behavior that benefits consumers and businesses. As Chairwoman Ohlhausen emphasized in her remarks, effective self-regulation helps everybody. The CBBB is delighted to be working with DSA to develop the framework for this exciting program.
This article was originally published by Direct Selling News and was written by C. Lee Peeler, Esq., a 33-year veteran of the Federal Trade Commission, is the President and CEO of the Advertising Self-Regulatory Council and EVP of the Council of Better Business Bureaus.