Kodak Referred to FTC Over Alleged False Claims on Printer Ink Prices

Last Updated Sep 3, 2009 7:20 PM EDT

The National Advertising Division of the Council of Better Business Bureaus has referred Kodak to the FTC for failing to back up its claim that consumers can save "on average $110 annually on ink by switching to Kodak ink and printers." The move will bring joy to HP, which believes Kodak's claim is false.

NAD ratted out Kodak to the feds after a complaint by HP. Rather than provide evidence for its claim, Kodak declined to participate in NAD's caged deathmatch self-regulatory process. So NAD referred the issue to the FTC, per its arrangement with that agency.

Kodak gave this reason for not cooperating:

We believe that HP's challenge is not about the truth and accuracy of Kodak's claims, but rather is simply an effort to maintain HP's dominant market presence while it continues to increase its ink prices.
We have previously successfully defended our ink savings claims utilizing the NAD process. After reviewing our testing data, the NAD concluded that Kodak "provided a reasonable basis for its ink cost-savings claim ('Save up to 50% on everything you print.')."
NAD, in an unusual second statement on the matter, rebutted that release:
To clarify, NAD amended its decision to note that the claims at issue in the most recent case â€" including save "on average $110 annually on ink by switching to Kodak ink and printers" â€" were neither reviewed by NAD nor were they the same claims for which NAD found a reasonable basis in the prior proceeding.
Now comes a test for the NAD-FTC relationship under the Obama Administration. Previously, NAD and FTC have touted their link, with FTC officials suggesting that complaints referred by NAD rise to the top of FTC's inbox.

If that relationship is still intact, then Kodak could find itself the subject of some unfortunate scrutiny and possible legal action. Class-action vultures lawyers will be watching closely.

If it is not intact, then the complaint will disappear like a stone into well, and never be heard from again. That would be bad news for NAD, as companies would realize that blowing off the self-regulator has zero consequences.

Final thought: This is yet another sign that NAD is growing feisty. It spent much of the year annoying MPAA with scolding press releases about adult movies being targeted at kids.