NAD Refers Advertising Claims from Cortec Corp. to FTC for Further Review

New York, NY –  Jan. 5,  2015 – The National Advertising Division has referred to the Federal Trade Commission (FTC) advertising claims made by Cortec Corporation, the maker of vapor corrosion inhibiting (VCI) products, after the advertiser declined to participate in a self-regulatory review of its advertising claims.

NAD is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus.

The decision to refer Cortec’s advertising claims follows an initial inquiry and a compliance review.

NAD opened its initial inquire after Cortec’s claims were challenged by Northern Technologies International Corporation, the maker of Zerust VCI products. The challenger took issue with a variety of claims made in e-mail communications with third-party distributors, including claims that the challenger’s VCI films did not “pass any standard test for corrosion protection,” that the challenger was “selling counterfeit product,” and that its VCI films were “failing due to outdated chemistry and a lack of quality control.”

NAD determined that the e-mail communications, directed to third-party distributors that sell the parties’ products to end users, fell within the definition of “national advertising” as outlined in NAD’s procedures. NAD found that Cortec did not provide a reasonable basis for the challenged claims and recommended Cortec discontinue the claims.

The advertiser disputed NAD’s jurisdiction, but said it “will take into account the NAD recommendations should it disseminate similar promotions or emails in the future.”

In December 2014, the challenger asserted that the advertiser continued to make claims similar to those challenged in the underlying proceeding and requested that NAD initiate a compliance proceeding.

In response to NAD’s compliance request, the advertiser stated that it did not agree to participate in either the underlying case or the compliance review.

NAD was disappointed that the advertiser declined to participate in the self-regulatory process. In light of the advertiser’s position, NAD, pursuant to Section 2.9 of the NAD/NARB Procedures, referred this matter to the FTC for possible law enforcement action.