National Advertising Division Says Pre-Launch Investor Presentation Can Be Challenged Under Advertising Law
View Debevoise In Depth
Key takeaways:
- It has long been a fundamental tenet of advertising law that comments made to investors, and particularly those made before the commercial launch of a product or service, do not constitute the kind of “advertising” that is regulated by the Federal Trade Commission or the National Advertising Division of BBB National Programs. Rather, comments made to investors are typically regulated by the Securities and Exchange Commission.
- The NAD has now ruled that it does have jurisdiction over certain claims made on investor-targeted websites and presentations–including communications made before any product or service is available for purchase–if the claims might be seen by consumers and might influence future consumer behavior.
- Companies must now consider whether product claims made in investor materials should undergo the same rigorous legal review as claims made in traditional advertisements, and should take other steps to minimize the risk that such statements could be viewed as influencing a consumer purchasing decision.