NAD FINDS H H GREGG ACTED PROPERLY IN DISCONTINUE ADVERTISING FEATURING CERTAIN SUGGESTED RETAIL PRICES

New York, NY – Jan. 17, 2012 -The National Advertising Division of the Council of Better Business

Bureaus has determined that H H Gregg took necessary and proper action in discontinuing certain

sale and savings claims that included a comparison to the suggested retail price, or SRP.

The claims at issue were challenged before NAD, the advertising industry’s self-regulatory forum, by

Home Depot USA, Inc.

NAD requested that the advertiser provide substantiation for claims that included:

• LG Electronics 30in. Self Cleaning Freestanding Convection Range in Stainless Steel “SRP

$1099.99, save $245.99, final price $854.00”

• “LG 30.7 Cu. Ft. Stainless Steel French Door Refrigerator SRP $3299.99.  Now $2999”

NAD also examined the following claims implied by the advertising at issue:

• H H Gregg’s suggested retail prices reflect the bona fide regular price for the products in the

market.

• Consumers will save $245.00 off the bona fide regular price for the LG Electronics 30 in. SelfCleaning Freestanding Convection Range in Stainless Steel at H H Gregg.

• $2999 is a $300 markdown from the bona fide regular price for the LG 30.7 Cu. Ft. Stainless

Steel French Door Refrigerator.

The challenged advertising listed the products’ prices juxtaposed against a suggested retail price, or

SRP, to indicate the potential savings consumers could achieve by shopping at H H Gregg. The

challenger maintained that H H Gregg compared its prices to inflated suggested retail prices that

appreciably exceeded the price at which substantial sales of the products are being made in the

area.

In response to NAD’s inquiry, the advertiser rejected the challenger’s allegations and maintained

that its use of suggested retail prices in its advertising was not false, misleading or deceptive and

that occasions where the SRP advertised did not reflect pricing in the marketplace were inadvertent.

The advertiser represented to NAD that it had initiated a review of its advertising policies and

procedures to confirm that its advertising is accurate and reflects the most current pricing available.

Further, the advertiser voluntarily agreed to permanently discontinue the challenged claims in the

advertising referenced in the challenger’s complaint and stated that it would not use suggested retail

prices in future advertising unless there is validation the SRP reflects the marketplace pricing.  The

advertiser stated that it will continue to review its advertising policies and procedures to ensure that

its advertisements accurately describe its offered products and services and that its advertising is in

compliance with all Federal Trade Commission regulations.

NAD noted in its decision that it appreciated the advertiser’s participation in the self-regulatory

process and was satisfied with the advertiser’s assurance that it had permanently discontinued the

challenged claims, and would not use SRPs in future advertising unless there is validation the MSRP

reflects the marketplace pricing.

 

NAD’s inquiry was conducted under NAD/CARU/NARB Procedures for the Voluntary Self-Regulation of National Advertising.  Details of the initial inquiry, NAD’s decision, and the advertiser’s response will be included in the next NAD/CARU Case Report.

About Advertising Industry Self-Regulation: The National Advertising Review Council (NARC) was formed in 1971. NARC establishes the policies and procedures for the National Advertising Division (NAD) of the Council of Better Business Bureaus, the CBBB’s Children’s Advertising Review Unit (CARU), the National Advertising Review Board (NARB) and the Electronic Retailing Self-Regulation Program (ERSP).

The NARC Board of Directors is composed of representatives of the American Advertising Federation, Inc. (AAF), American Association of Advertising Agencies, Inc., (AAAA),  the Association of National Advertisers, Inc. (ANA), Council of Better Business Bureaus, Inc. (CBBB), Direct Marketing Association (DMA), Electronic Retailing Association (ERA) and Interactive Advertising Bureau (IAB).  Its purpose is to foster truth and accuracy in national advertising through voluntary self-regulation.

NAD, CARU and ERSP are the investigative arms of the advertising industry’s voluntary self-regulation  program. Their casework results from competitive challenges from other advertisers, and also from self-monitoring traditional and new media. NARB, the appeals body, is a peer group from which ad-hoc panels are selected to adjudicate NAD/CARU cases that are not resolved at the NAD/CARU level. This unique, self-regulatory system is funded entirely by the business community; CARU is financed by the children’s advertising industry, while NAD/NARC/NARB’s primary source of funding is derived from membership fees paid to the CBBB. ERSP’s funding is derived from membership in the Electronic Retailing Association. For more information about advertising industry self-regulation, please visit www.narcpartners.org