The National Advertising Division (NAD) was created to ensure the credibility and truthfulness of advertising claims. It is a part of the Better Business Bureau (BBB), one of the best known self-regulatory trade associations in the United States. Self-regulation expresses a commitment on a company’s part to adhere to certain rules that demonstrate best practices and social responsibility. Although their standards do not have the force of law, companies that engage in self-regulation agree to go beyond what is legally required. Trade associations such as the Better Business Bureau create self-regulatory programs for their members. The BBB uses its website, newspapers, and the media to inform consumers of businesses who violate these standards. They may also receive low ratings in BBB reliability reports, and accredited members can be expelled from the association. The BBB consists of hundreds of local chapters across the United States and Canada that operate independently but work together through the umbrella organization called the Council of Better Business Bureaus (CBBB).
Because the CBBB recognizes the importance of advertising’s influence on consumers, it established the National Advertising Review Council (NARC) in 1971 in conjunction with the Association of National Advertisers (ANA) and other advertising associations. The NARC establishes policies and procedures for the investigatory arm of the Council, the National Advertising Division (NAD).
The NAD is an important form of self-regulation in developing a transparent marketplace between businesses and consumers. The division has helped many consumers avoid falling prey to advertising scams, and it provides important information on the ethical practices of an organization. Those companies failing to resolve consumer complaints often have their ratings downgraded, a practice that alerts consumers to exert caution in dealing with them. Conversely, accredited members of the BBB or nonaccredited members with high ratings are generally perceived to be more honest. Businesses that wish to become members of the BBB agree to comply with eight ethical principles to promote trust in the marketplace. Accredited members must pay a fee to be a member.
