Disclose, Disclose, Disclose

Similar to the New York law, which we wrote about here and here, California’s law requires advertisers to include a clear and conspicuous disclosure when an audio, video, or audiovisual advertisement prominently features an AI-generated synthetic performer. (Note that New York’s law does not apply to audio advertisements and requires a disclosure when any synthetic performer appears, whether or not it is “prominently featured.”)

Unlike the New York law, which is not prescriptive as to the content of the disclosure, California requires that the disclosure contain language “substantially similar” to the following: “This performance features a synthetic performer” or “No human performer is depicted.” Additionally, California prohibits the continued use of any advertisement found to be in violation of the law.

California’s law defines synthetic performer as a “human-like digital figure, voice, or representation created in whole or in part through artificial intelligence, machine learning, or other computational techniques, where the performer is not based on or intended to depict an identifiable natural person.” The law defines “prominently” as (a) in the foreground and demonstrating or illustrating the product or service; (b) providing or voicing the on- or off-camera narration or commercial message; or (c) illustrating or reacting to the on- or off-camera narration or commercial message. Basically, if you can see or hear the synthetic performance in an ad, it should be disclosed. The legislation contains an exception for advertisements promoting expressive works, including films, television programs, streaming content, documentaries, and video games, where the synthetic performer is used in a manner consistent with its use in the underlying work.

The Cost of an Uncredited Performance

The state attorney general can enforce the act under California’s consumer protection regime. Failure to include the disclosure may result in injunctive relief or a fine of up to $2,500 per violation. Furthermore, California ties a violation of SB 1050 to the state’s Unfair Competition Law, which could trigger private litigation, including class actions.

Getting the Campaign Camera-Ready

While the law’s disclosure requirement is relatively narrow, its practical reach may be broad. Brands should consider reviewing:

• Marketing campaigns that use AI-generated avatars, voices, or spokespersons
• Internal advertising review and approval procedures
• Agreements with agencies, production companies, and AI-content creators
• Disclosure practices across video, audio, and social media content

Brands should also consider whether existing advertising compliance programs adequately address the growing number of AI-specific obligations emerging at the state level.

Fade to Black: Key Takeaways

SB 1050 sends a simple message: Advertisers may use synthetic performers, but consumers should know when they are seeing them. For brands embracing AI-generated talent, the challenge now is ensuring that required disclosures are just as visible as the performers themselves.

The opinion addresses a central question in Section 230 litigation: whether Section 230 bars legislation or litigation that nominally targets social media companies’ curation and/or product-design decisions but, in practice, seeks to impose liability on platforms for publishing third-party content. A divided Fifth Circuit panel found that Section 230 likely preempts the Monitoring and Filtering Provision because it would require DSPs to monitor, alter and/or remove third-party content from their platforms.

This distinction and courts’ willingness to look beyond the stated purpose of legislation (or lawsuits) is especially important given states’ focus on regulating teens’ social media usage and a wave of litigation against social media companies that rely on products liability and other similar theories to sidestep Section 230.

Section 230: Background and Purpose

Congress enacted Section 230 in 1996 to, among other things, promote the development of the internet, preserve a vibrant and competitive online free market “unfettered by Federal or State regulation,” and incentivize platforms to voluntarily develop blocking and filtering tools. 47 U.S.C. § 230(b). Under Section 230, “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” id. § 230(c)(1), and “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section” id. at § 230(e)(3).

In practice, Section 230 provides online platforms broad immunity against lawsuits arising from the content of user posts and from legislation that would require them to remove third-party content. Courts have long interpreted Section 230 to immunize websites from liability arising from publishers’ “traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content.” Zeran v. Am. Online, Inc.,129 F.3d 327, 330 (4th Cir. 1997). Section 230 immunity is not limited to defamation/libel claims and has been applied to “causes of action of all kinds.” Marshall’s Locksmith Serv. Inc. v. Google, LLC, 925 F.3d 1263, 1267 (D.C. Cir. 2019).

The Securing Children Online Through Parental Empowerment Act

Texas enacted the Securing Children Online Through Parental Empowerment Act or “SCOPE Act,” to regulate certain “digital service providers” that operate social media services used by minors. In particular, the SCOPE Act’s Monitoring and Filtering Provision required covered platforms to develop and implement a strategy to prevent known minors from being exposed to specified categories of harmful content. Tex. Bus. & Com. Code § 509.053. These requirements applied to DSPs that allowed users to socially interact, create profiles or create/post content that could be viewed by others. Id. at § 509.002.

Computer & Communications Industry Association and NetChoice L.L.C. challenged the Monitoring and Filtering Provision, and a separate group challenged additional SCOPE Act provisions, including an age verification requirement. In August 2024, the District Court for the Western District of Texas issued a preliminary injunction blocking several provisions of the SCOPE Act, including the Monitoring and Filtering Provision. Texas appealed.

The Fifth Circuit’s Decision

A divided panel of the Fifth Circuit[1] affirmed the district court’s decision granting a preliminary injunction as to the Monitoring and Filtering Provision, holding that it is likely preempted by Section 230(c)(1).[2]

The court began by noting that Section 230 provides DSPs “broad immunity” against “all claims stemming from their publication of information created by third parties.” (Op. at 26 (quoting Doe v. MySpace, Inc., 528 F.3d 413, 418-20 (5th Cir. 2008).) While the court acknowledged that Section 230 does not bar claims depending purely on whether a party complies with a statute, it rejected Texas’s argument that the Monitoring and Filtering Provision merely imposed affirmative statutory requirements. Instead, the court looked to the practical effect of the Monitoring and Filtering Provision and held that it was likely preempted because enforcement actions would stem from “DSPs’ actions as publishers, that is, from their monitoring, screening, and deletion of content.” (Op. at 28.) Therefore, in practice, it would hold DSPs liable for “deciding whether to publish, withdraw, postpone, or alter content.” (Op. at 28 (quoting A.B. v. Salesforce, Inc., 123 F.4th 788, 795 (5th Cir. 2024).) This contrasts with age verification requirements because the Monitoring and Filtering Provision “is all about filtering content, and is thus preempted.” (Op. at 29 – 30.)

The court also rejected Texas’s argument that DSPs’ First Amendment protections narrow their Section 230 immunity. Labeling that argument a “false choice,” the court found that the First Amendment and Section 230 work together because “the First Amendment protects the DSPs’ editorial discretion from unconstitutional government regulation, and Section 230 protects those same decisions from civil liability based on third-party content.”[3] (Op. at 32-33.)

Judge Ho’s Partial Dissent

Judge Ho dissented from the majority’s holding that Section 230 likely preempts the SCOPE Act’s Monitoring and Filtering Provision. He asserted that the Monitoring and Filtering Provision regulates “curation,” not publication, because while the posts that appear on a child’s feed are third parties’ speech, “the algorithm that social media companies design to curate that feed constitute[s] the first-party speech of the companies.” (Op. at 37.) Judge Ho contended that recent First Amendment decisions support this distinction because they treat curation as first-party speech. Finally, he asserted that the Monitoring and Filtering Provision does not impose liability for publishing third-party speech, because it does not hold DSPs liable if they implemented adequate curation practices.

Key Takeaways and Implications

This split reflects a broader doctrinal divide. Under the majority’s approach, Section 230 bars curation requirements that would require filtering, and moderating third-party content because they would impose liability on companies for publishing third-party content. By contrast, Judge Ho’s approach focuses on the platform’s conduct and concludes that laws dictating how platforms curate content do not impose liability for publishing third-party content.

This issue is playing out around the country as states seek to regulate social media companies and plaintiffs attempt to hold social media companies liable. State laws requiring platforms to monitor, filter, remove or suppress user-generated content are likely to face substantial Section 230 challenges, and Computer & Communications suggests that courts may look past the stated goal of legislation or litigation and consider whether it targets the product’s design (irrespective of the content it serves) or seeks to hold defendants liable for publishing allegedly harmful content.

[1] Judge Dana M. Douglas wrote the majority opinion, joined by Judge Patrick Higginbotham. Judge James Ho concurred in part and dissented in part, disagreeing with the majority’s Section 230 preemption analysis.

[2] The court separately held that the Students Engaged in Advancing Texas (SEAT) plaintiffs lacked standing to challenge several provisions because their alleged injuries depended on speculative predictions about how the SCOPE Act would be enforced and how platforms might respond to the law. It also held that the SEAT plaintiffs’ challenge to age verification requirements was foreclosed by recent Supreme Court precedent. (Op. at 25 n.11.)

[3] Since the court held that Section 230 preempts the Monitoring and Filtering Provision, it did not rule on whether the Monitoring and Filtering Provision is constitutional.

Subscription Violations Run the Gamut

The FTC’s allegations center on a portfolio of different subscription-based products, including fitness, nutrition, ADHD-related self-help, PDF-editing tools, psychic chats and other digital services. Like many ROSCA cases, the complaint takes aim at enrollment, including disclosures and consent, as well as cancellation. While this alone would have been enough to draw the FTC’s attention, the complaint did raise a few more nuanced issues, as outlined below:

• Free trials. According to the complaint, consumers were frequently presented with trial or introductory offers but allegedly were not provided clear and conspicuous disclosures regarding the recurring nature of the subscriptions and the charges that would follow.  

• Dark patterns. The complaint states that the “ads direct consumers to websites that engage consumers in a task. This initial engagement creates more incentive for users to continue, so as not to lose the effort already expended.” So, is requiring a quiz prior to purchase prohibited? In short, no. But it may lead to extra scrutiny, and the FTC has interpreted the law to require that the material terms be disclosed to consumers prior to substantial expenditure of time, energy, or information. If a quiz is incorporated into a checkout flow, then consumers should at a minimum know that they will have to make a purchase at the end of it to receive the results.

• Trial vs. recurring prices. The complaint asserts that advertising a trial price while disclosing the regular, recurring price only in fine print is misleading. The FTC indicates in this action that the checkout flow cannot refer to only the trial price; the price that the customer will be charged after renewal must be similarly visible, and not relegated to a disclaimer.

• Upsells. After the initial purchase of the underlying subscription, many services will offer add-ons at an additional cost. The FTC views this as a new subscription offer and has the same expectations regarding disclosure and consent as at the initial purchase. Accordingly, the FTC alleges a pattern of unauthorized charges, including duplicate charges and undisclosed add-ons.

• Simple cancellation. Many consumers allegedly could not cancel through the company’s apps or websites, and customer service representatives sometimes failed to process cancellation requests even after assuring consumers that they had done so.

As you consider your subscription practices, there are common takeaways to note. Companies should periodically test their enrollment and cancellation flows from the consumer’s perspective, ensuring that material terms are disclosed before consumers invest significant time in the purchasing process, that recurring charges are presented as prominently as introductory offers, and that cancellation can be completed through reasonable and readily available means.

The TRO and Individual Liability

The FTC’s requested relief is unlikely to become the new normal. Rather, the complaint suggests that a combination of aggravating factors led the Commission to conclude that immediate intervention was necessary. The FTC alleged not merely ROSCA violations but also a repeatable enterprise-wide model deployed across multiple brands and entities, combined with notice from consumer complaints and payment processors and the ability to move assets through affiliated entities. In response, the FTC sought a TRO implementing injunctive provisions and an asset freeze against corporate and individual defendants. While naming individual executives is not uncommon, the remainder of the requested relief is.

The first of these aggravating factors is ROSCA compliance.  In this case, the core allegations involved conduct that ROSCA expressly regulates: clear disclosure, informed consent and simple cancellation mechanisms. Some aspects of the complaint – such as the dark pattern argument – are more nuanced and not directly reflected in plain language of ROSCA, but the disclosure, consent and cancellation allegations all are direct violations of the statute. Additionally, defendants were allegedly on notice that these practices were misleading following warnings from third-party service providers and consumer complaints. Following these warnings, the FTC stated that “[r]ather than fixing their business practices . . . [d]efendants churn out new and deceptive products, continually register new companies, and open fresh merchant accounts to avoid fraud monitoring programs.” Companies will not often change their practices wholesale in response to consumer complaints, but the FTC was concerned here about a demonstrated practice of opening new companies, using affiliates to conceal identities, and the movement of the sales proceeds throughout “shell companies.”

Together, these facts indicated to the FTC a company that could shut down, move its assets elsewhere, and start a new business that continued these same violations of the law. To prevent that, the Commission sought a TRO.

For the same reason, the FTC included individual defendants in the TRO, seeking to prevent the people it viewed as directing the conduct from shifting assets or continuing the alleged practices through new entities.

The broader lesson is not that international operations or affiliated entities independently create TRO risk but that risk increases when facial compliance issues are combined with evidence of notice, continued consumer harm, efforts to avoid payment monitoring, and an organizational structure that may permit the conduct or assets to move elsewhere. Subscription businesses should therefore review not only their enrollment and cancellation flows, but also whether complaints, chargebacks, refund requests, and processor warnings reveal recurring problems across products or affiliates.

With its proposed enforcement policy statement issued last week, the FTC has jumped into the ongoing debate regarding the use of personalized pricing (sometimes more nefariously called “surveillance pricing”), suggesting it will take an “aggressive” stance against businesses whose pricing practices may constitute unfair or deceptive acts under Section 5.

The proposal does not ban personalized pricing outright – and the FTC has not been given that authority by Congress. However, the statement signals a hard-line enforcement posture focused on transparency and consumer expectations.

What Is Personalized Pricing?

Personalized pricing refers to the practice of using consumer-specific data, including browsing history, purchase history, location, demographics, or other behavioral signals, to predict how much a particular consumer is willing to pay for a good or service and then adjusting prices for that consumer accordingly. Unlike more traditional dynamic pricing, driven by supply and demand (think hotel prices that rise over graduation weekend, airline prices that escalate during peak vacation weeks, or Taylor Swift tickets anytime), personalized pricing is based on characteristics and behaviors specific to and associated with an individual customer. It has more of a Big Brother feel (hence the term “surveillance pricing”) rather than just up and down fluctuations for all consumers.

The FTC’s Proposed Enforcement Position

For now, the FTC seems focused on disclosure rather than prohibition. Importantly, Chairman Andrew Ferguson emphasized that the agency does not believe it currently has authority from Congress to ban personalized pricing in all circumstances. Instead, the FTC takes the position that the failure of a company to clearly and conspicuously disclose to a consumer not only when pricing is personalized, but also the basis for that personalization and the categories of data being used, may violate Section 5 of the FTC Act. This position is in line with this FTC’s focus on working within the four corners of the FTC Act.

The agency seems poised to enforce personalized pricing under both the deceptive and unfair prongs of the statute. For example, the statement suggests that retailers may violate Section 5 if they represent, expressly or by implication, that a price is static or widely offered when, in fact, it is personalized or if they mislead a consumer as to the basis for the personalization. The statement further suggests that allowing a consumer to pay a higher price based on undisclosed personalized pricing practices may constitute a substantial injury to a consumer.

The FTC is currently seeking public comment on the proposal during a 30-day comment period, which will kick off officially once the notice is published in the Federal Register.

Why the FTC Is Concerned

The proposal builds on the FTC’s continued interest in personalized pricing practices. In January 2025, FTC staff released preliminary findings indicating that retailers and third-party intermediaries were using a wide range of consumer information to tailor prices and promotions, including location data, demographics, browsing patterns, shopping history, and even website interaction data such as mouse movements. The FTC has also previously expressed concern that consumers may have little ability to avoid higher prices when they are unaware that personalization is occurring. Whereas informed consumers might take steps, such as using private browsing tools, VPNs, or avoiding certain retailers altogether, if they were aware that their personal data was being used to determine a price, without clear disclosures, consumers may not realize that the price displayed to them differs from the price offered to someone else. (Of course this concern really focuses on protecting the hapless consumer who may end up paying more, notwithstanding a potential willingness to do so. It also ignores the fact that with personalized pricing some consumers may actually pay less for a good or service. And this is the point: If a seller can capture a higher price point from relatively price-insensitive consumers, the seller can also drop pricing for others who may not have bought at the one-size-fits-all price, thus selling more overall based on each purchaser paying the right price for them. But we digress. . .)

Broader Regulatory Momentum

The FTC’s proposal does not exist in a vacuum. As we previously wrote, several states, including Maryland, Connecticut, and New Jersey, have already passed legislation requiring disclosures and prohibiting certain personalized pricing; while others, such as New York and California, have similar legislation pending. Additionally, there are proposals related to personalized pricing in both houses of Congress.

Key Takeaways for Businesses

The FTC’s proposed policy statement suggests that the central compliance question may shift from whether a company engages in personalized pricing to how openly it communicates those practices. Businesses that leverage AI-driven pricing tools, customer analytics platforms, or third-party pricing technologies should carefully evaluate whether their disclosures accurately reflect how consumer data influences pricing decisions. These businesses should also consider whether their customers will view such practices as desirable and how much information they want to impart.

Although the proposed policy statement does not create new law, it offers an important window into the FTC’s enforcement priorities. Companies that rely on consumer data to optimize pricing strategies should expect continued scrutiny from regulators, lawmakers, and consumer advocates, particularly where pricing decisions are opaque or difficult for consumers to detect. This is in line with this FTC’s focus on “kitchen table issues” that affect the pockets of American consumers.

Looking Ahead

The FTC’s latest move underscores a broader trend in privacy and consumer protection enforcement: Transparency is increasingly viewed as a baseline requirement when businesses use personal data in ways that materially affect consumers. As personalized pricing technologies become more sophisticated, organizations should anticipate heightened expectations around disclosure, governance, and accountability. Whether the FTC’s proposal ultimately leads to formal enforcement actions or additional rulemaking, one message is already clear: The era of invisible surveillance pricing is facing growing regulatory resistance.

Here Dyson challenged claims made by Dreame Technology for its Dazzle Hair Styler and the Miracle Pro Hair Dryer. The products were claimed to dry shoulder-length hair in two minutes. Elsewhere there were disclaimers or additional language that short hair could be dried in one minute and long hair dried in four minutes, with all the usual caveats about variability for thickness and texture. The ads all showed a woman with very long hair luxuriously cascading to her lower back. One ad claimed the dryer was fast, durable and powerful and “dried hair in just two minutes.” There was a disclaimer that the time varies based on the thickness and length of hair. That NAD found this to be insufficient was no surprise. Other ads said hair dries in two minutes, with smaller text saying this was for shoulder-length hair.

What flipped our wig was the last ad, where the claim itself was “Dazzle dries shoulder-length hair in two minutes.” NAD surprisingly also recommended this presentation be modified. While acknowledging the claim itself mentioned shoulder-length hair, NAD said that because longer hair was depicted and the ad was silent about the drying time for longer hair, some reasonable consumers might take away an unsupported message that long hair also can be dried in two minutes. In many cases, NAD wants the claim itself to include the key details. In this case, it did – the claim language regarding drying time specifically identified shoulder-length hair. We would submit that any reasonable person would consider the model in the accompanying picture to have hair much longer than shoulder length. The general hair-drying population is likely well aware longer hair takes a longer time to dry. What we infer from this is that NAD basically is saying the photo in this case could reasonably be understood as a demo and even though the words specially mention a shorter hairdo, consumers looking quickly would innately take away a speed claim for the hair shown.  While not sure if this is an outlier or a new trend, the lesson here is that when reviewing written performance claims connected with a photo of the product in use, pause to see if there is a possible disconnect between the text and the visual image, recognizing that NAD may well put more weight on what the picture might say to consumers than the literal words. 

Mueller Sports Medicine challenged certain claims made by Howies Hockey that its Athletic Tape and Hockey Tape were the “World’s Highest Quality.” Mueller argued that the relative quality of athletic tapes is something one can measure and test and because of this, Howies’ claim had to be supported. NAD instead found that when used by itself, such a claim would be understood as a statement of corporate pride or bravado that does not require support.

In some contexts, Howies used the tagline with or near descriptions of product attributes, things like performance, durability and adhesion.

In that case, NAD recommended discontinuing or modifying the claim to avoid conveying product superiority. It is not clear from the decision exactly how to do that, but presumably some clear separation between the tagline and any performance discussion would suffice.

An interesting addition to the decision was a specific recommendation that Howies make “bona fide, good faith efforts” to instruct third-party resale sites to discontinue or modify the claim as outlined in the decision. Often whether an advertiser has control over third parties or what their obligations are regarding third parties comes up in the context of a compliance challenge. Here, NAD has addressed the issue up front. We will keep watching to see if this is an outlier or a new trend and whether NAD gives any guidance as to what qualifies as bona fide, good faith efforts. 

New Jersey’s Fair Price Protection Act

Surveillance Pricing

On July 23, New Jersey Gov. Mikie Sherrill signed the Fair Price Protection Act (the Act) into law, making it a deceptive and unfair practice for retailers to use a consumer’s online activity, location, purchasing history, or other collected data to charge different prices for identical grocery and household essential products based on what an algorithm predicts a consumer is willing (or able) to pay.

The Act amends New Jersey’s Consumer Fraud Act to prohibit the use of surveillance pricing (or any other pricing strategy in which an algorithm or automated system uses consumer personal data) to determine or vary the price of covered products. Under the Act, covered products are limited to “groceries and other foodstuffs,” which are defined broadly to include groceries, beverages, paper products, household cleaning items, health and beauty products, pet food and supplies, and similar household necessities. Prepared foods sold for immediate consumption are excluded.

In-scope retailers will have until August 1, 2027 to comply with the surveillance pricing restrictions.

Electronic Shelf Labels (ESLs)

The Act also establishes a one-year moratorium, effective February 1, 2027, on the deployment of new ESLs while the state studies their potential relationship to surveillance pricing. Following the expiration of the moratorium, any new ESL use must comply with any rules or regulations promulgated based on the resulting study. In the meantime, any current use of such labels may continue.

Exclusions and Exemptions

The Act exempts certain pricing practices, such as:

• Reasonable costs associated with providing covered items to different consumers, provided that the price of the item may not be adjusted more than once in a 24-hour period
• Bona fide discounts to consumers, provided that the eligibility criteria for such discounts is (a) publicly and conspicuously disclosed and (b) uniformly applied to any member of a broadly defined group (e.g., a 20% discount to students)
• Discounts offered as part of a consumer loyalty program, provided that the loyalty program meets certain outlined criteria, including voluntary opt-in and publicly disclosed terms and conditions that detail the retailer’s data practices

Additionally, the Act imposes certain restrictions on the subsequent use of data subject to an exemption.

Penalties and Private Rights

Violations of the Act may result in civil penalties of up to $10,000 for a first offense and $20,000 for subsequent offenses, as well as injunctive relief and restitution.

One important open question concerns private litigation. Earlier versions of the legislation included an express private right of action that does not appear in the enacted statute. Nevertheless, because the Act amends the New Jersey Consumer Fraud Act, plaintiffs are likely to argue that existing Consumer Fraud Act remedies remain available for alleged violations. Whether courts ultimately adopt that position remains to be seen.

A Growing Patchwork of State Laws

With the passage of the Act, New Jersey joins Maryland and Connecticut in regulating surveillance pricing, while New York (which had already implemented an algorithmic-pricing disclosure regime) is poised to implement broader restrictions if Gov. Hochul signs the pending One Fair Price Act.

This patchwork of laws reflects a shared concern regarding the use of consumer data in pricing decisions; however, each state takes a different approach with respect to covered entities, prohibited conduct, and loyalty-program exceptions.

Connecticut’s Broad Approach

Earlier this year, Connecticut passed SB4/HB5563, amending the Connecticut Data Privacy Act to prohibit the use of surveillance pricing by any retail seller operating in the state, including food establishments and third-party delivery services, across a wide range of industries. Effective October 1, 2026, the law also requires a mandatory disclosure in the event a consumer’s personal data was used to increase that price.

As with New Jersey, certain common pricing practices are exempt from the broad sweep of the statute, including (i) pricing for customer retention, (ii) justifiable costs incurred in providing a good or service, and (iii) group discounts and loyalty programs.

Maryland’s Narrower Scope

Effective October 1, 2026, Maryland’s Protection from Predatory Pricing Act prohibits the use of surveillance pricing within the food industry to set higher prices using consumer data, specifically targeting large food retailers and third-party delivery services.

As with New Jersey and Connecticut, Maryland’s law exempts certain pricing practices, including customer retention, justifiable costs incurred, group discounts, and loyalty programs.

New York: One to Watch

New York’s Algorithmic Pricing Disclosure Law is already in effect and requires disclosures when certain personalized pricing practices rely on consumer data and algorithms. With the One Fair Price Act (S.8623B/A.9349B), New York lawmakers have approved broader legislation that would move the state beyond disclosure requirements and toward substantive restrictions on surveillance pricing in line with Connecticut and New Jersey.

Key Compliance Considerations

Surveillance pricing is a rapidly evolving area, with new laws pending or being enacted in multiple jurisdictions. Retailers should take the time to review their current consumer data and pricing practices, along with the terms of any loyalty or other discount programs, to understand (and potentially amend) how consumer data is obtained and utilized with respect to the pricing of covered items.

Retailers should consider:

• What consumer data feeds pricing systems?
• Are discounts offered on standardized terms?
• Does an algorithm determine actual prices or merely identify promotions?
• Are protected characteristics, or proxies for protected characteristics, influencing pricing outcomes?
• Do existing loyalty programs adequately disclose how consumer data is collected and used?
• Do similarly situated loyalty-program participants receive the same benefits?

The general rule for when a “world’s best” claim is a puff: When used as a stand-alone statement, it is usually puffery. But when accompanied by attributes, it becomes a comparative claim requiring substantiation. But what if the language itself includes an attribute? Is that always a claim, or is there some wiggle room? NAD recently found the latter.

Vacation Sunscreen proclaims itself to be the World’s Best-Smelling Sunscreen. A competitor thought this was so cut and dried that they challenged the statement in the 20-day SWIFT track, asserting it was a claim and banking on the fact that Vacation had not done a consumer scent preference test. Even though “best-smelling” is an attribute that can be tested in ways detailed by the ASTM, NAD didn’t stop there. It said that which scents are the “best” is inherently subjective. Further, the broad “world’s best” made the statement so broad and exaggerated, NAD didn’t think consumers would expect there to be broad substantiation. So, the lesson here is to look carefully at what you are asserting to be the “world’s best.” World’s best cancer cure, probably a claim. When claiming your products give a world’s best feeling, like scent or sound, there may be room to take the position that this is a puff, at least when used as a tagline.

NAD went on to look at the context in which the claim was used. Just like a vacation hotel room can be wonderful or terrible depending on the view, so can the interpretation of a “world’s best” promise be influenced by its surroundings. As a stand-alone statement, NAD found it a puff. On the Vacation website, however, it was presented in quotes along with statements of consumer sentiment – that is, had 4.8/5-star reviews and the total number of reviews it had received. In that context, NAD found the statement could convey a claim that the sentiment is substantiated by the reviews. NAD recommended those ads be modified to avoid conveying that implied claim. Presumably, this would mean putting space between the “world’s best” language and the reference to consumer reviews.

Here’s hoping our readers are all consuming this blog on a beautiful beach. And if so, remember to apply your SPF regardless of the scent!

PetIQ claimed that PetArmor was the “#1 Brand in Total Flea & Tick Solutions.” Its competitor Elanco argued that such a claim expressed that PetArmor had the largest market share in flea and tick products for dogs. PetIQ asserted the claim did not convey a top-selling-product message but instead communicates that PetArmor offered the most comprehensive range of flea and tick products. Nielsen tracks seven different flea and tick product categories, and PetArmor is the only brand with products in all seven categories. (For those with itchy pets who may be wondering, those categories are collars, dewormers, household products, on-animal sprays, oral products, shampoos and topicals). In support of this being the only reasonable interpretation of the claim, PetIQ explained that the claim was made with a depiction of multiple products in the line with the disclosure that it was the “only brand in all depicted Nielsen parasiticide segments.” Further, the claim itself referred to “total” and “solutions.”

NAD noted these arguments and appreciated what PetIQ intended to convey. Nonetheless, NAD said any #1 brand claim is likely to convey a market superiority claim and not merely a statement about the breadth of the product line. NAD found that context more likely conveyed a broad top-selling claim about the full range of PetArmor products. NAD further found that consumers associate a #1 claim with market share and that the disclaimer contradicted that message rather than clarifying it. NAD thus recommended the claim be discontinued or modified to convey a market share claim. NAD did not give guidance as to how such a modification might be accomplished or, in particular, as to whether there is any variation on a #1brand claim that could be so limited or if PetIQ needed to simply dispense entirely with its #1 brand language.

Elanco also challenged the claim that PetArmor was the “#1 Fastest Growing Flea & Tick Brand.” Both companies agreed this claim was conveying that PetArmor was growing at a faster rate than competing brands in the category. PetIQ calculated Nielsen data for all 620 brands in the flea and tick category and calculated the year-over-year market share percentage change based on revenue for 2025 compared to 2024. PetIQ asserted the data showed it was the fastest-growing by both absolute and percentage of revenue growth. Elanco submitted competing Nielsen data from a slightly different time period showing more significant growth by a smaller competitor. NAD found that looking at the competing data sources, the claim clearly depended on the time period, the growth metric, the channel universe and the competitor comparison set, noting that relative growth rates are sensitive and even volatile, particularly among smaller and newer entrants to the category. Therefore, NAD found an unqualified “#1 fastest growing” claim could not be supported and needed to be qualified to include details of the basis for the claim. This decision is yet another blow for companies seeking pithy claims without lots of qualifying fine print. Another option NAD suggested was a claim limited to growth among leading brands, as looking at a smaller, more established universe may control for some of the volatility seen when trying to make a claim looking at the entire market.

NAD has noted that #1 claims – be they #1 brand, #1 ingredient or #1 product – are powerful to consumers. These claims tell consumers they can’t go wrong going with the thing more consumers select. And brands have forever proudly promoted their #1 status. We remind clients that while powerful, leading with such claims is a heavy burden, particularly on packaging, because the substantiation needs to be regularly refreshed – generally annually, but perhaps more often if significant new entrants or other market changes disrupt the status quo. It is not a claim, in other words, that you can set and forget.

But first the key principals: #1 brand claims are generally understood to be market share claims, and generally the best support for such claims is based on current, reliable third-party unit data rather than sales data. One product might be more expensive than another, so it boasts more revenue comparatively, but looking at the number of units sold is often referred to as the truer “apples-to-apples” comparison. (As a sidenote, NAD has generally said a company can support a #1 claim with sales data but needs to include the basis for the claim in a clear disclaimer.)

On to beets. We are talking about not the roasted or boiled kind but those in dietary supplements. The Human Power of N Company, maker of the SuperBeets® line, challenged claims made by Force Factor, maker of Total Beets®, that they were “America’s #1 Best-Selling Beets Brand” and the “#1 Beets Brand in America.” There was no dispute that SuperBeets was the #1 best seller in units. But Total Beets mounted many interesting arguments as to why its claim was nonetheless supported. This was a case in the 20-day SWIFT track, but the data involved was more complicated than in your run-of-the-mill speedy NAD case.

Total Beets argued that you can’t accurately measure popularity based on unit sales, because each company sold its beet supplements in multiple different forms and sizes, such that dollar sales were the only way to really look across the different product lines to get a good comparison. NAD found that while there are differences in product form, package configuration and pricing, SuperBeets had not presented evidence compelling enough to demonstrate that those differences make unit sales an inappropriate measure of how frequently consumers purchase the competing brands or that dollar sales would better reflect the message conveyed by the challenged #1 claims. So the presumption in favor of using unit sales is alive and well. There was an older case where NAD found dollar sales were a better metric for a #1 claim, but in that case (involving lint rollers) the price differences were minimal and one company sold substantially more smaller-sized packages – a unique fact pattern, to say the least.

SuperBeets also argued the unit data used from third-party retail sources was outdated. While Total Beets acknowledged some of the data has not been refreshed, it pulled current data and satisfied NAD that its claim was still valid.

One interesting twist in the case: NAD found that the claim “#1 best-selling” would be understood to be based on unit sales data. NAD went on to say that the basis for the formulation “#1 beets brand” claim was not so clear, and recommended that SuperBeets disclose that such a claim was based on unit sales. For advertisers who like short and sweet claims without fine print, this case suggests NAD may be parsing these cases more finely than perhaps has been done in the past, and in some cases looking for disclaimer of the basis even if you have current reliable unit sales data.