NAD doesn't often examine pricing claims, but a recent routine monitoring case highlights its attention to some of the most popular techniques used by marketers: countdown clocks, strike-through pricing and limited time sales. The Decision provides a useful reminder of the basic rules of sale advertising. 

The case involved advertising by Syscend, Inc. d/b/a Guardian Bikes and addressed Guardian's “40% off” savings claims, strikethrough/reference pricing, countdown timers, and limited-time sale language.  And, although “NAD recognizes that aggressive price competition serves to benefit consumers,” this Decision underscores the fact that “such benefits are only realized when savings claims are accurate, include all material terms, and enable consumers to assess the value of a bargain or sale.” Consistent with the FTC’s Guides Against Deceptive Pricing, frequently cited throughout the Decision, NAD noted that it “is incumbent on advertisers not only to clearly communicate the price of the sale item, but to ensure that the savings promised are real and not based on a dramatic markdown of a fictitious price.”  Further, when an advertiser represents an offer as available for a limited time, that offer must, in fact, be available only for a limited time. 

Here, the advertiser used strikethrough pricing to highlight the purported difference between its price and competitors’ prices.  NAD noted that, although advertisers are free to choose the object of their price comparison, they must clearly communicate any material information about that comparison. Moreover, when comparing the price of one’s own merchandise to competitors’ rather than to one’s own former price, the advertiser must make the object of their comparison clear.  Further, the comparison must be “to comparable merchandise of essentially similar quality and obtainable in the area.”  

Guardian agreed to modify its claim to include a comparative value disclosure, i.e., to make it clear that 40% off was not a reference to its usual/former price, but to competitors’ prices.  NAD further recommended that this “clarifying language be included in the main claim or by way of a clear and conspicuous disclosure in a manner that does not contradict the main claim and is repeated throughout each iteration of the claim where necessary.” 

Also at issue was whether Guardian’s pairing of its “40% off” claim with its offer of “$100 in free accessories” conveyed the inaccurate message that, during the advertised sale, consumer would get these savings off Guardian’s regular prices and receive free accessories. In addition, NAD examined Guardian’s use of three consecutive expiring count-down timers which potentially conveyed false urgency during what appeared to a single sale period rather than three. Guardian agreed to modify its advertising to clarify the parameters and terms of its limited-time promotions, which NAD recommended be done with clear and conspicuous disclosures. 

As always, NAD stated that it would treat the advertiser’s voluntary modifications for compliance purposes as though NAD recommended them and the advertiser agreed to comply with them.

Report #7592.