Wal-Mart Stores Inc needs to make its price-matching policies clearer and stop claiming in a television commercial that viewers can save more than $700 a year buying groceries in its stores, an advertising industry self-regulating group said on Monday.

The National Advertising Division of the Council of Better Business Bureaus said it examined Wal-Mart's ads after competing food retailer H-E-B Grocery Co challenged the discount retailer's claims.

H-E-B said Wal-Mart's ads touting Unbeatable Prices were interpreted by consumers as a lowest price guarantee, but Wal-Mart's disclaimer failed to fully reveal limitations on its price-matching program.

H-E-B also challenged a Wal-Mart ad telling consumers that if they spent $100 a week on groceries at a supermarket, you could save on average over $700 a year by buying those kinds of groceries at Wal-Mart.

After studying the ads, NAD said that while Wal-Mart, the largest U.S. grocery seller, could support its Unbeatable Prices advertising claims, it should make its price-matching disclosures substantially more clear and conspicuous in ads where it uses the Unbeatable claim.

NAD also said that Wal-Mart's claim of $700 in grocery savings was not supported by the evidence in the record and should be discontinued.

While the Wal-Mart ad cites a cost comparison study by Global Insight, NAD said there was a significant disconnect between the study and the claim made in the commercial.

In the challenged commercial, Wal-Mart promises 'you,' i.e. the individual watching the commercial, that 'you' could save, on average, over $700 a year by shopping at Wal-Mart, NAD said in its report.

But NAD said the Global Insight Study cannot support this message, as it concerns a national average. The competitive landscape of grocers varies largely throughout the nation.

Wal-Mart said it disagreed that its $700 grocery savings claim was not adequately substantiated.

Although we are not currently running this particular spot, we firmly believe that this claim is well-supported by the Global Insight study, Wal-Mart said in a statement.

The retailer said it would take NAD's recommendations into account in future advertising.

(Reporting by Nicole Maestri, editing by Matthew Lewis)

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