Until recently sports fans looking to play daily fantasy sports had the choice of two “number one” websites. Both FanDuel and DraftKings plastered the Internet with advertisements claiming to be the biggest daily fantasy site in existence. This can’t be true, of course, and FanDuel managed to produce some actual numbers to back up its case before appealing to a higher power.
The organization in charge of policing this dispute and the several dozen like it in the U.S each year is the National Advertising Division. There are laws against publishing misleading advertisements, and in the early 1970s it seemed as if Ralph Nader-style consumer groups would result in more regulations. “There are ticking sounds that we hear in all the pressure groups, congressional hearings and other forums that are meeting to decide our fate,” said Victor Elting Jr., the chairman of the American Advertising Federation, at the time.
So the advertising industry founded the National Advertising Division in 1971. While various federal agencies and state attorneys general have authority to regulate misleading advertising, the division is the way for the industry to handle things before they get to that level. Cases often originate with one company complaining about a competitor’s sketchy claims. NAD holds hearings and asks fibbers to cut it out. While it has no enforcement power, it does have an agreement with the Federal Trade Commission that it will look at any case in which the violator doesn’t change its ways. That threat is usually enough to keep companies in line.
Overly enthusiastic claims are relatively common, according to NAD’s Linda Bean. The division handled about 25 cases last year in which a company claimed some kind of edge over a competitor that it couldn’t back up. This doesn’t include what’s known as puffery, claims so vague that they’re not verifiable in any reasonable way. Puffery is totally kosher.
So far this year NAD has asked a company called iSatori to stop saying it was the “#1 Best Selling Energy Pill”, and told Pharmavite to stop making sourceless claims that its supplements were the “#1 Pharmacist Recommended” products. The absolute claim to be paramount at something goes beyond vague bragging.
DraftKings’ claims to be the top daily fantasy website have been irritating FanDuel for most of this year. About two months ago FanDuel went to NAD with numbers from independent web analytics companies showing that it had twice the monthly visits of its competitor, and last week DraftKings agreed to stop making such claims.
DraftKings says it had decided to stop running such ads even before the agreement was reached. Nigel Eccles, FanDuel’s chief executive, disagrees: ”It sounded like they got their hand caught in the cookie jar and then said, ‘I didn’t even want a cookie.’”
The squabbling between the companies isn’t likely to stop. DraftKings announced Monday that it had purchased DraftStreet, another daily fantasy site. Femi Wasserman, a spokesperson for the company, says that it is now just as big as FanDuel. Eccles disputes this, of course, saying that measured by total users he expects the new company to be less than one-half the size of his company, largely because many of the DraftStreets users were already using both sites. While FanDuel publishes information about its user base and revenue, DraftStreet does not.
Eccles won’t be able to rely on NAD to mediate any further, however, because DraftKings says it will keep any boasting out of its advertisements. “We don’t plan to reinstate the claims we used to make,” says Wasserman.
