NAD has revised its SWIFT challenge rules to accept simple "implied" claims. The cases, for now, must still involve a single issue, and the implied claims must be very obvious, akin to "necessary implication" matters.
If you plumb the NAD case report archives from its early days, you may be surprised at the brevity of the written decisions. The case reports are often less than a page in length and include a bare-bones recitation of the issues and findings. This was not satisfying to many advertisers, who clamored for more rigorous analysis and guidance. Over time, NAD decisions became longer and more lawyerly and consequently took longer to issue. The growing time lag between challenge and decision became a sore spot for industry participants.
In an effort to address these concerns, in 2020, NAD launched a truncated case track known as "SWIFT," which rendered decisions on cases involving "simple" claims within 20 business days of filing.
Until recently, NAD's rules had limited SWIFT challenges to only three types of cases:
1. Cases involving "the prominence or sufficiency of disclosures including disclosure issues in influencer marketing, native advertising, and incentivized reviews;"
2. "Misleading pricing and sales claims;"
3. "Misleading express claims that do not require review of complex evidence or substantiation such as clinical or technical testing or consumer perception evidence."
The third category proved to be the most controversial. And many parties took advantage of a procedural opportunity to challenge jurisdiction.
While the rule said the SWIFT track was limited to "express claims" and NAD typically declined SWIFT treatment for challenges of implied claims, the rule is now expanding to include both "Misleading express and implied claims..." NAD announced this change in an online bulletin. Many advertisers and counsel had not seen this announcement.
The change proposed by NAD is an effort to reduce the number of challenges to SWIFT jurisdiction involving whether the challenged claim was "express" or only "implied."
A concern with the rule revision will be exactly how it will be interpreted by NAD. In a recent public meeting, NAD's Director, Laura Brett, suggested that the only implied claims accepted into SWIFT will be those that are "necessarily implied," which she characterized as implications akin to "you know it when you see it." This, however, is not the traditional understanding of "necessary implication." Under the relevant case law, "necessary implication" claims are just a subset of express claims (and are legally treated as such). A "literally false" message may be either explicit or "conveyed by necessary implication" when, considering the advertisement in its entirety, "the audience would recognize the claim as readily as if it had been explicitly stated." Moreover, "a message can only be literally false if it is unambiguous." So, if the claim reasonably implies more than one meaning, it is ambiguous and cannot be "necessarily implied." For this reason, necessary implication cases are rare, and indeed, the doctrine has been only very infrequently invoked by courts in the last decade.
Another concern is that NAD's preliminary, jurisdictional decision regarding whether or not to accept a challenge into SWIFT Fast Track is effectively outcome-determinative and may not be appealed. In all but one of NAD's published SWIFT decisions, the advertiser either withdrew the claim or lost. Advertisers who protest acceptance of their matter into the SWIFT timeline but lose the issue are stuck. They will likely lose. They cannot appeal the NAD's determination to include their matter in SWIFT. Great discretion is vested in NAD when it makes its initial, unappealable jurisdictional determination.
It is no wonder then that challengers find SWIFT attractive. SWIFT already constitutes nearly 20% of NAD's docket. NAD's decision to broaden SWIFT to include implied claims will likely increase that proportion. Is this good for advertising?
If this situation persists, one can expect that the proportion of SWIFT cases will continue to grow and that SWIFT cases involving allegations about implied claims will become more common. As a challenger, I might choose SWIFT to challenge a single, obvious implied claim, foregoing challenges to other claims that were concurrently being made, purely to obtain a "quick and cheap win." This may be great for challengers but not great for truth in advertising as a whole as it would arguably discourage more thorough and complete advertising challenges. Moreover, it will gradually drain NAD's regular case docket, largely returning it to the old days of very brief decisions on single-issue cases.
"If this situation persists. one can expect that the proportion of SWIFT cases will continue to grow and that cases involving what are inarguably allegations about implied claims will become more common. This may be great for challengers, but not for advertisers."