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The Marketing Environment, Social Responsibility, and Ethics | Chapter 3 65

Self-Regulation
The Better Business Bureau
is one of the best-known self-
regulatory programs.

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programs. Although these programs are not a direct outgrowth of laws, many were established
to stop or stall the development of laws and governmental regulatory groups that would regu-
late the associations’ marketing practices. Sometimes trade associations establish ethics codes
by which their members must abide or risk censure or exclusion from the association. For
instance, the Pharmaceutical Research and Manufacturers of America released its “Guiding
Principles” to function as a set of voluntary industry rules for drug companies to follow when
advertising directly to consumers.
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Perhaps the best-known nongovernmental regulatory group is the Better Business
Bureau , a local regulatory agency supported by local businesses. About 113 bureaus help
to settle problems between consumers and specific business firms in the United States and
Canada. Each bureau also acts to preserve good business practices in a locality, although it
usually lacks strong enforcement tools for dealing with firms that employ questionable prac-
tices. When a firm continues to violate what the Better Business Bureau believes to be good
business practices, the bureau warns consumers through local newspapers or broadcast media.
If the offending organization is a Better Business Bureau member, it may be expelled from
the local bureau. For example, the St. Louis Better Business Bureau expelled three firms for
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failing to respond to complaints or requests.
The National Advertising Division (NAD) of the Council of Better Business Bureaus
operates a self-regulatory program that investigates claims regarding alleged deceptive adver-
tising. For example, NAD recommended that Comcast stop marketing its XFINITY Internet Better Business Bureau
service as “the fastest in the nation” because it felt Comcast did not have evidence to back up A local, nongovernmental
its claim. Another self-regulatory entity, the National Advertising Review Board (NARB) , regulatory agency, supported by
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considers cases in which an advertiser challenges issues raised by the National Advertising local businesses, that helps set-
tle problems between customers
Division (NAD) about an advertisement. Cases are reviewed by panels drawn from NARB
and specific business firms
members representing advertisers, agencies, and the public. For example, the NARB deter-
National Advertising Review
mined that companies using the Fair Trade USA seal on its labeling must specify the percent-
Board (NARB) A self-regulatory
age of fair trade ingredients on the label. The NARB, sponsored by the Council of Better
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unit that considers challenges
Business Bureaus and three advertising trade organizations, has no official enforcement pow-
to issues raised by the National
ers. However, if a firm refuses to comply with its decision, the NARB may publicize the
Advertising Division (an
questionable practice and file a complaint with the FTC. arm of the Council of Better
Self-regulatory programs have several advantages over governmental laws and regula- Business Bureaus) about an
tory agencies. Establishment and implementation are usually less expensive, and guidelines advertisement

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