Regulators Won’t Investigate Claims That Walmart’s “Raise In Pay” Commercial Is Misleading

Federal regulators won’t investigate a Walmart television advertisement two months after an ad review board found the retailer might have misled TV viewers about recent changes in pay for Walmart workers.

Earlier this summer, the National Advertising Division of the Council for Better Business Bureaus attempted to verify claims made in Walmart’s “Raise in Pay” campaign about the store’s recent wage increases and workers’ quality of life. When Walmart refused to comply with the NAD review process, the board forwarded the matter to the Federal Trade Commission, which handles false advertising claims, to consider.

The FTC responded in September with a letter [PDF] to the NAD saying the agency had decided against opening an investigation into the matter.

According to the FTC’s letter, the agency came to its decision not to probe the commercial after considering “a number of factors related to resource allocation and enforcement priorities, as well as, the nature of any FTC Act violation and the type and severity of any consumer injury.”

In requesting the investigation, the review board expressed concern that the ad implied Walmart had raised the wages of its employees from minimum wage to $15 per hour, and that the increased wages represented a living wage, allowing employees to earn enough money to support themselves and “build a future.”

The 30-second ad features a variety of Walmart employees going about their daily lives outside of the work, while a voice over opines about earning a living wage and Walmart’s investment of over $1 billion this year in higher wages, education and training.

At the time of NAD’s initial inquiry, Walmart declined to participate on the grounds that the board lacked jurisdiction.

The retailer also disagreed that the commercial conveyed any implied messages that required substantiation. The company contended that whether the commercial made any implied claims, support for such claims was outside NAD’s mandate and that NAD did not have the expertise, bandwidth or procedures to fairly collect, analyze and evaluate the relevant facts and related policies to address the issues that the inquire raised.

A spokesperson for NAD tells AdAge that the FTC sometimes declines to investigate an issue after informally talking to an advertiser and receiving assurance hat the spot won’t continue to run as is.

However, she was unaware if that was the situation with the FTC and Walmart.

A spokesperson for Walmart tells AdAge that the retailer has not agreed to modify or stop running the ad.

While iSpot.tv shows that the ad hasn’t run since Sept. 3, an unedited version can still be found on Walmart’s official YouTube page.

This isn’t the first time Walmart’s initiative to provide higher wages has come under fire.

Last month, reports surfaced that despite the retailer raising wages, it had turned to cutting worker’s hours if a store’s sales projections aren’t in line with its labor spending.

While Walmart claims this won’t affect efforts to provide better customer service, cleaner stores, or properly stock shelves.

However, one Texas Walmart staffer says her store has cut 200 hours of worker pay per week from its ledger. In a single day, eight workers — including department managers — had been sent home by late afternoon. The employee says a customer had to wait 30 minutes for service because of the lack of staff.

[via AdAge]

by Ashlee Kieler via Consumerist