Private equity portfolio companies are a growing area of focus for the BBB National Programs’ National Advertising Division (NAD), the U.S. advertising industry’s self-regulatory body. As addressed below, within the last six months the NAD has ruled on at least two cases challenging private equity-backed portfolio companies, and the NAD has announced that it will continue to pursue appropriate cases against PE portfolio companies. 

The NAD seeks to ensure that advertising claims are truthful and accurate for consumers, thus promoting fair competition for advertisers. The NAD assesses the truth and accuracy of claims made in national advertising in response to challenges by competitors, as well as through inquiries opened on its own initiative (known as “monitoring cases”). While NAD itself does not have enforcement capabilities, most companies voluntarily comply with NAD recommendations because noncompliance will lead to a referral to the Federal Trade Commission (FTC) or Food and Drug Administration (FDA) for investigation and enforcement.

The NAD believes private equity would benefit by understanding the role and function of the NAD for two interrelated reasons. First, private equity portfolio companies may take advertising risks that could subject them to NAD challenge, and PE firms should be aware of this possibility and the potential consequences (including discontinuation of claims or referrals to the FTC or FDA). Second, portfolio companies may benefit from bringing their own NAD challenges against competitors for false or misleading advertising.

At the NAD’s 2025 Annual Conference, NAD Director Phyllis Hurwitz Marcus said she expects the NAD to expand its work with private equity firms in the coming years. Although the NAD is not specifically targeting private equity firms or portfolio companies and in fact does not take private equity ownership into account when choosing its own monitoring cases, the NAD does expect more cases in this area as portfolio companies become more active in the advertising space.

The NAD has recently focused its internal monitoring efforts on advertising claims for products and services related to artificial intelligence, financial services and healthcare, which are also areas in which private equity firms have been active. Additionally, various pharmaceutical companies have filed NAD challenges against advertising disseminated by compounding pharmacies, particularly those marketing GLP-1 medications or other weight loss products. We provide additional details on these hot-button areas below.

• Artificial Intelligence (AI): The NAD employs a full-time attorney focused on monitoring artificial intelligence claims, which it views as ripe for oversight because consumers often cannot evaluate the truthfulness of the claims themselves. In recent cases, the NAD has focused on misrepresentations of AI capabilities, availability or timing of features, and lack of adequate disclosures. For example, in an April 2025 monitoring case, the NAD found a company’s “Available Now” claims misleading where some AI-powered features were not actually live at launch. The NAD recommended that the company modify or discontinue those claims and improve disclosures.

In a separate May 2025 monitoring case, the NAD evaluated claims for an AI-powered digital assistant product. The NAD determined that certain express functionality claims—for example, that the digital assistant can “synthesize and summarize large amounts of data”—were adequately supported, but it flagged other marketing statements as misleading. The NAD recommended that the company qualify or discontinue claims implying seamless cross-app functionality (e.g., “working seamlessly across all your data”) and productivity claims (e.g., “67 % . . . of users are more productive”) that lacked sufficient support.

• Financial Services: Recent cases underscore the principle that claims made for financial products or services (e.g., those used in fintech, investment services or lending) must be grounded in robust substantiation, avoid overstated qualifiers like “lowest” or “best” and include clear, consumer-friendly disclosures that explain limitations or assumptions. In a September 2025 case, for example, the NAD reviewed a competitor’s challenge to a fintech company offering 401(k) plans and retirement plan software. The competitor challenged a claim of “~$140 million ARR,” arguing the claim could mislead readers because its calculation included subscription fees, AUM revenue, and backlog bookings— reflecting a practice that is not commonly accepted. The NAD found the company’s claim was not improper but said the claim needed a clear disclosure explaining how the figure was derived.

• Healthcare: The NAD generally takes a strict, evidence-based approach to healthcare and wellness claims, requiring that advertisers possess competent and reliable scientific evidence—often well-controlled human clinical studies—before making claims about a product’s health-related benefits. The NAD closely scrutinizes both express and implied health claims, particularly those suggesting long-term health benefits, “clinically proven” results or disease prevention outcomes. For example, in an August 2025 monitoring case, the NAD challenged claims made by a company offering executive physicals, including claims that clients can “live the longest, most fulfilling life” and that the service ensures a longer, disease-free life. The NAD concluded that the company did not present sufficient reliable scientific evidence in support of the claimed health benefits, including the early detection of serious diseases. The NAD recommended discontinuation or modification of the claims; after the company declined to submit a statement of intent to comply, the case was referred to the FTC.

The NAD is also fielding challenges regarding compounded peptide and weight-loss drug claims, typically prompted by major pharmaceutical companies seeking to ensure fair competition and consumer clarity in the rapidly expanding compounding market. For example, one company challenged a compounding pharmacy over claims for its compounded tirzepatide product, alleging that the pharmacy’s marketing overstated safety and efficacy and implied equivalence to FDA-approved GLP-1 medications. The pharmacy chose to voluntarily discontinue the claims before a full NAD review took place. Similar cases have been brought by different pharmaceutical companies against other compounding pharmacies.

In addition to NAD actions in the PE-intensive industries described above, there have been at least two recent cases involving established companies bringing advertising challenges against smaller PE-backed enterprises. In a June 2025 challenge brought by a bottled water trade association, the NAD determined that a PE-backed company that markets and sells purified water in plant-based cartons provided a reasonable basis for its claims regarding recyclability, tree planting and certain environmental impact. However, the NAD recommended that the company modify or discontinue other claims related to renewable materials and sustainable sourcing.

In an April 2025 case, a prominent consumer product company challenged claims made by a PE-backed oral care company. NAD recommended that the PE-backed company discontinue certain teeth remineralization, teeth whitening and mouthwash claims on the grounds that the company did not possess the necessary evidence to support the claims. The company appealed the NAD decision to the National Advertising Review Board (NARB), the appellate body for NAD. NARB largely upheld NAD’s findings, recommending that the company discontinue its remineralization, whitening and prebiotic ingredient “fresher breath” claims because the company lacked competent and reliable scientific support (e.g., no testing of its own formulated products, no causal connection shown) and because neither the FDA nor the American Dental Association supported the applicable claims. The PE-backed company publicly stated that, though it “strongly disagrees” with the NARB’s conclusions, it will comply with the ruling while continuing to invest in research.

For private equity firms and portfolio companies, NAD serves as both a risk management tool and competitive lever. Its decisions spotlight evolving standards for advertising, helping sponsors anticipate regulatory exposure across portfolio companies. Just as importantly, NAD’s challenge process provides a low-cost, strategic avenue to contest misleading claims by competitors, leveling the playing field and protecting portfolio value. Integrating NAD awareness into diligence and compliance can enhance both brand integrity and exit preparedness. 

Private Equity Report Fall 2025, Vol 25, No 3