National Advertising Division Finds Certain Claims for ZenBusiness Supported; Recommends Other Claims be Modified or Discontinued

New York, NY – January 4, 2024 – In a challenge brought by competitor LegalZoom.com Inc., the National Advertising Division (NAD) of BBB National Programs determined that ZenBusiness Inc. provided a reasonable basis for certain claims for its business services platform that provides corporate formation services. NAD recommended, however, that ZenBusiness discontinue or modify other challenged claims.

Rankings on ZenBusiness Webpages

ZenBusiness operates a webpage with the headline “Best Service Providers (Top 4 Reviewed),” ranking itself at #1 (“Excellent Overall Service”) and LegalZoom at #3 (“Known for Branding”). The rankings and reviews are controlled by ZenBusiness and are advertising for ZenBusiness LLC formation services.

NAD recommended that ZenBusiness discontinue its rankings and review format or modify its advertising to avoid conveying a message that the review and rankings webpages and the reviews and rankings themselves are genuine, independent, and on an objective review site.

Because the links on the challenged webpages direct consumers to a page presenting only purchase options for ZenBusiness, NAD also recommended that ZenBusiness modify its advertising to avoid conveying a message that links will direct consumers to a page where competitive services can be purchased.

Claim ZenBusiness is “Recommended” by Third Party Websites

In context, NAD found that consumers would reasonably interpret the claim that certain publications “recommend” ZenBusiness to mean that these publications approve of ZenBusiness for LLC formation services, not that they deem ZenBusiness to be superior to competitors. NAD found the claim that Forbes, Investopedia, MarketWatch, and Bizreport “recommend” ZenBusiness to be supported based on their respective reviews of ZenBusiness as a business formation service.

However, NAD recommended ZenBusiness modify its advertising to avoid conveying a message that NerdWallet has recommended ZenBusiness because NerdWallet does not provide such broad, unequivocal recommendations as the “recommended by” claim implies.

NAD also recommended that ZenBusiness clearly disclose the material connection between ZenBusiness and the endorsing publications with which it has an affiliate relationship. NAD noted that although ZenBusiness discloses that the recommendations are by its “affiliate partners,” consumers may not understand what “affiliate partners” means.

Claim Endorser “Recommends” ZenBusiness

NAD determined that consumers may believe a particular endorser, who is a celebrity and well-known entrepreneur, to be an expert in evaluating business formation services like those offered by ZenBusiness.

NAD found ZenBusiness provided reasonable support that the “recommended” endorsement was based on the endorser’s expert evaluation of the services but recommended a clear and conspicuous disclosure of the material connection between the endorser and ZenBusiness when using the endorsement.

Claim that ZenBusiness “Forms in about 1 to 2 Days”

During the proceeding, ZenBusiness modified the “forms in about 1 to 2 days” claim to state that consumers using their Pro and Premium services will “File in 1 to 5 days**,” with an accompanying asterisk and disclosures of similar font size below the claim that states, “**These filing times are averages and include our processing times and Secretary of State turnaround times, which vary by state.”

NAD found that although the initial claim was not supported, the modification of the claim to “file in 1 to 5 days**” and its clear and conspicuous accompanying disclosure clearly convey that the stated timeframe refers to filing times and not corporate formation.

“Save 43%” Claim

The ZenBusiness website features a page titled “ZenBusiness vs LegalZoom,” highlighting a claim to “Compare and save up to 43%.” Next to the copy, the challenged claim “Save 43%” appeared between listed prices of LegalZoom Pro and ZenBusiness Pro. A banner invites consumers to “compare ZenBusiness and LegalZoom formation services to discover how you can save up to $199,” followed by charts comparing the price of each ZenBusiness service package and its related features against its LegalZoom counterpart (Basic vs. Starter, Pro vs. Pro, Premium vs. Premium).

NAD determined that the service packages that are the basis of the savings claims are clearly identified and the comparisons are based on equivalent service packages, but that the 43% (now 29%) savings claims appearing above the banner and comparison charts do not clearly and conspicuously disclose the limited conditions under which the quantified savings are achieved.

NAD recommended ZenBusiness clearly state in close proximity to the 29% savings claims that the savings are based on prices that include the purchase of optional services and one year of use.

“$0” Claim

NAD determined the claim of “$0—Launch with ZenBusiness” reasonably conveys a message to consumers that they will not incur any costs in forming their business using ZenBusiness services. NAD found that ZenBusiness’ disclosure on a separate webpage stating that the advertised “$0” offer does not include mandatory state filing fees fails to prevent a misleading message from being conveyed.

NAD recommended ZenBusiness either discontinue the claim that consumers can launch a business with ZenBusiness for “$0” or modify its advertising to disclose clearly and conspicuously at the outset, and in close conjunction with the claim, that consumers must still pay state filing fees.

During the proceeding ZenBusiness agreed to permanently discontinue several challenged claims. Therefore, NAD did not review these claims on their merits and will treat them for compliance purposes as though NAD recommended they be discontinued and ZenBusiness agreed to comply.

In its advertiser’s statement, ZenBusiness stated that it “will comply with NAD’s recommendations and appreciates NAD’s diligence in reviewing the issues in this challenge” although it disagrees with certain aspects of NAD’s decision.

All BBB National Programs case decision summaries can be found in the case decision library. For the full text of NAD, NARB, and CARU decisions, subscribe to the online archive. This press release shall not be used for advertising or promotional purposes.

About BBB National Programs: BBB National Programs, a non-profit organization, is the home of U.S. independent industry self-regulation, currently operating more than a dozen globally recognized programs that have been helping enhance consumer trust in business for more than 50 years. These programs provide third-party accountability and dispute resolution services that address existing and emerging industry issues, create a fairer playing field for businesses, and a better experience for consumers. BBB National Programs continues to evolve its work and grow its impact by providing business guidance and fostering best practices in arenas such as advertising, child-and-teen-directed marketing, data privacy, dispute resolution, automobile warranty, technology, and emerging areas. To learn more, visit bbbprograms.org.

About the National Advertising Division: The National Advertising Division (NAD) of BBB National Programs provides independent self-regulation and dispute resolution services, guiding the truthfulness of advertising across the U.S. NAD reviews national advertising in all media and its decisions set consistent standards for advertising truth and accuracy, delivering meaningful protection to consumers and leveling the playing field for business. 

Contact:
Jennie Rosenberg
Media Relations
BBB National Programs
[email protected]