To learn the truth about political campaign ads, we rely on fact checkers who promise to filter out the spin. In the equally confusing realm of credit-card advertising, an obscure self-regulatory agency is looking to play a similar role.

The National Advertising Division, a 10-person shop that's based in New York, investigates allegations that companies are engaging in deceptive marketing, often after a competitor lodges a complaint.

Just last week, the organization released its ruling in a big-money dispute between the credit-card industry's two largest advertisers, JPMorgan Chase and Capital One Financial. Chase prevailed, but Capital One is vowing to appeal.

The National Advertising Division adjudicates disputes over everything from diapers and toilet paper to financial products. The self-regulatory system allows large companies to avoid more costly, longer-running courtroom fights over marketing claims that might be obsolete by the time the cases are finally resolved.

"This is a remarkable process because companies choose to voluntarily participate, and we get just an amazingly high level of compliance with the decisions," says Lee Peeler, chief executive of the Advertising Self-Regulatory Council, the umbrella organization that houses the National Advertising Division.

Five times in the last four years, it has investigated advertising claims about credit cards.

The ads are familiar to anyone who watches television. "Earn Rewards that are worth more!" "Points Worth 25% More!" "Always double rewards!"

Marketing claims are required to be both truthful and substantiated. So when a company's advertising assertions are challenged, the firm faces the burden of backing up those claims.

The decision released this week was Chase's second victory before the self-regulatory organization in the last six months. In May, the group sided with Chase over a complaint it brought against Discover Financial Services.

The Capital One case involved claims regarding its Spark credit cards, which target business customers.

Chase argued that Capital One's assertions were unsupported by evidence. Specifically, the New York bank took issue with claims that Spark provides "the most rewards of any small-business credit card," the "most miles of any business credit card" and the "most cash back of any business credit card."

The stakes for both companies were high. In 2011, Chase was the nation's largest credit-card advertiser, spending $360.6 million, while Capital One was number two at $245.3 million, according to an Ad Age report.

During a roughly 90-day investigation, the National Advertising Division looked at the rules that govern Spark rewards, the spending habits of Spark customers, and how Spark matches up against competitors.

The specifics of the dispute were arcane. For example, the two companies argued in excruciating detail over how to determine the spending pattern of a typical small-business owner.

That question is often pivotal because the rules that govern rewards are complex. So a card that will be a greater deal for one customer will often be a poor choice for another consumer.

The Spark card provided 2% cash back on every purchase with no earnings cap, plus the opportunity to earn $150 in bonuses, with a $59 annual fee, which was waived in the first year.

By contrast, a competing card from Chase provided 5% cash back on the first $25,000 spent annually on office supplies, wireless and landline telecommunications, 2% cash back on the first $25,000 spent annually on gas and dining, and 1% cash back on all other purchases, plus the opportunity to earn a $250 cash bonus, and no annual fee.

So which was the better deal?

In the end, the National Advertising Division ruled that Capital One's evidence was not sufficient to support its claims that it offered the "most rewards," "most miles," and "most cash back." The organization recommended that the company discontinue the claims.

But Capital One disputed the conclusion, and promised to appeal to another self-regulatory panel, the National Advertising Review Board. In its rebuttal to Chase's claim, it claimed that a typical small-business owner would earn $691 annually in cash back using the Spark card, 44% more than that same customer would earn using Chase's Ink card. 

"The record, which contained evidence regarding the spending patterns of millions of small-business credit cardholders, strongly supports a conclusion that a typical small business would earn more rewards under Capital One's formula than it would earn under any competing program," company spokeswoman Tatiana Stead said in an email.

"Note that Chase offered no evidence whatsoever that its own program, or any rival issuer's program, would yield greater rewards for the typical small business cardholder," she added.

Appeals of the self-regulatory organization's decisions are relatively infrequent, according to spokeswoman Linda Bean. She said that the organization decides roughly 150 cases per year, of which about 8 to 12 are appealed.

In the case decided in May, Discover agreed to modify certain advertising claims regarding its cash rewards program.

In other credit-card cases decided since 2010, Chase agreed to change some statements after American Express objected, and U.S. Bank pledged to discontinue certain claims following a complaint by American Express.

The self-regulatory organization's decisions aren't binding, but they are sent to federal regulatory agencies, which can take action if a company fails to comply.

Peeler says that the relative speed of the National Advertising Division's process is a major benefit.

"I think every challenger that has come through the system would like it to be quicker, but I think we do an amazingly quick job given the complexity of some of the cases that we resolve," he says.

The adjudication system also helps make the credit-card marketplace more competitive, says Odysseas Papadimitriou, chief executive officer of, which lets consumers compare card offers.

He explained that if companies offer products that don't benefit typical customers, they will be forced either to withdraw their marketing claims or improve the rewards offer. Either way, customers win.

"I think at the end of the day, consumers need a way to get to the bottom line," Papadimitriou said. "It's definitely better than suing each other."

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry