Don’t Sleep On Price Comparison Claims, NAD Cautions

Advertising Law

Nectar Sleep LLC should discontinue “limited offer” advertising claims for its Nectar mattress, the National Advertising Division (NAD) recommended in a challenge brought by competitor Tuft & Needle.

In retail, online and social media advertising, Nectar promoted its mattress with the claim “LIMITED OFFER: $125 OFF + 2 Free Pillows.” The challenger argued that the claim was misleading because it offered a price comparison to a fictitious former price, with no indication that the Nectar mattress had ever been sold at a higher price.

Further, Nectar doesn’t offer the pillows for sale, Tuft & Needle told the NAD. If a user tries to purchase a pillow, she is directed to a page showing the item is “out of stock.”

Nectar responded that its mattresses were offered at the regular price for “a substantial period of time” and that while its pillows may have been out of stock for some limited period of time, it has offered them for sale in the past and continues to do so.

The NAD noted the case was initially referred to the Federal Trade Commission (FTC) after Nectar failed to provide a substantive response. Following the referral, the advertiser returned to the NAD and agreed to participate in the self-regulatory forum.

Reviewing the claim, the NAD emphasized that advertisers must communicate the price of a sale item and ensure that the promised savings are real. The decision reminded advertisers of the FTC Guides Against Deceptive Pricing, which make clear that the use of a fictitious former price as a point of comparison constitutes false advertising.

“Based on the evidence in the record, NAD determined that the ‘LIMITED OFFER: $125 Off’ claim was misleading to consumers,” the NAD wrote. “The advertiser did not provide NAD with any evidence about its previous advertising for its mattresses or pillows. Indeed, despite the advertiser’s representations to the contrary, it does not appear that the Nectar mattresses were ever offered for sale at the ‘regular’ price prominently displayed on its website or in its retail advertising.”

As for the pillows, the self-regulatory body found the statement misleading for similar reasons, as the advertiser provided no evidence that the “2 Free Pillows” offer had been made available to consumers even for a limited amount of time.

The NAD recommended that the advertiser discontinue the challenged claim.

To read the NAD’s press release about the case, click here.

Why it matters: Advertisers would be well served to review their pricing claims, as challenges to deceptive pricing are popping up not only before the NAD but in courts across the country. Fossil Group recently paid $4.5 million to settle a deceptive pricing suit, while earlier this year, a California appellate panel ruled that a state statute was not unconstitutionally vague on its face or as applied to national retailers accused of deceptive pricing.