Capital One argued that ads for Chase Bank’s Freedom Credit Card “misrepresented” certain claims. Reuters

Call it clash of the banking titans.

Following a complaint brought on by one of its biggest rivals, Chase Bank has reluctantly agreed to modify future TV and Web ads for its Freedom Rewards card, according to the National Advertising Division (NAD). In the dispute, Capital One argued that Chase “materially misrepresented the scope and value of its 5 percent cash-back rewards feature.” The NAD, the investigative unit of the advertising industry’s self-regulatory mediation body, examained the phrase “5 percent cash back” and looked at whether or not the claim implied that the offer included all purchases without restrictions.

It turns out it doesn’t. The 5 percent rewards are, in fact, limited to rotating “bonus categories” that require special activation every business quarter, the NAD said in a press release on Friday. The offer has a $1,500 cap on combined purchase in the specific categories, but the way Capital One tells it, customers can earn, at most, $75 in cash-back awards in any given quarter. Chase countered that its ads “clearly communicate” the Freedom Card’s terms and limitations.

Capital One disagreed -- so much so that it commissioned its own mall-intercept survey to gauge consumers’ perception of the 15-second spots. Of the 171 participants who were asked to watch Chase’s commercials, more than half interpreted the 5 percent cash-back claim to mean -- go figure -- that cardholders earned 5 percent on all purchases.

According to the NAD, Chase took issue with Capital One’s study, pointing to “flawed and confusing” survey questions and the failure to include a control commercial. While the NAD shared some of those concerns, it concluded after an independent review that the commercial could reasonably confuse consumers regarding the terms. The division recommended that Chase make numerous modifications to its TV advertisements. It also recommended that Chase link to disclosures in its online banner ads related to the Freedom Cared.

According to the NAD, Chase “respectfully disagreed” with the determination, but said it supports the self-regulation process and will take into account the NAD recommendations on future TV and banner advertising.

The Chase Freedom website currently includes a disclaimer under the 5 percent cash-back claim, but makes no mention of rotating bonus categories.

Chase Bank is owned by JPMorgan Chase (NYSE:JPM). Capital One is owned by Capital One Financial (NYSE:COF).

Administered by the Council of the Better Business Bureaus, the NAD mediates disputes within the advertising industry as a means of reducing the need for litigation. Read its full release on the Chase Bank inquiry here.

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