New York, NY – Jan. 26, 2012 -The National Advertising Division of the Council of Better Business

Bureaus has recommended that LG Electronics USA discontinue advertising claims made for the

company’s Cinema 3D Television and 3D glasses.

Advertising claims made by LG in Internet and television advertising, press releases and dealerdirected

materials were challenged separately before NAD – the advertising industry’s self-regulatory

forum – by Sony Electronics, Inc., and Samsung Electronics America, Inc.

Claims at issue in the proceedings included:

• “FOUR OUT OF FIVE CONSUMERS PREFER LG CINEMA 3D OVER SONY AND SAMSUNG ACTIVE

3D IN HEAD-TO-HEAD COMPARISON”

• “In 3D TV Tests, 4 out of 5 People Choose LG over Sony and Samsung for Overall 3D

Experience”

• “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Overall 3D Experience”

• “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Brightness”

• “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Color”

• “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Picture Quality”

• “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Glasses”

• “[LG Cinema 3D provides] Picture Perfect 3D. From Any Angle”;

• “Consumers favor passive 3D technology, like LG Cinema 3D, because they prefer every

aspect of the passive 3D TV experience”

• “Consumers’ clear preference for passive 3D” has been demonstrated by “independent,

unbiased research”

In both the Samsung and Sony cases, the key issue before NAD was whether the consumer perception

evidence submitted by the advertiser could serve as support for its line claims. In both

cases, NAD examined the conditions under which consumers viewed the parties’ 3D televisions,

including the viewing distance and angle, screen sizes, panel refresh rate and the resolution of the

3D televisions tested, as well as the 3D glasses offered by the parties.

In its consideration of Samsung’s challenge, NAD also reviewed the structure of LG’s

consumerperception questionnaire.

(Full text of decisions available to media upon request.)

The advertiser’s LG Cinema 3D range of products comprises seven models of 3D-enabled HDTVs,

available in screen sizes ranging from forty-two inches to sixty-five inches, and three models of

passive 3D glasses. LG employs passive 3D technology in their LCD televisions, in which viewers

wear low-cost 3D glasses with polarized lenses identical to those used in 3D movie theaters today

Sony currently sells ten different models of 3D-enabled HDTVs, available in screen sizes ranging

from thirty-two inches to sixty-five inches on the  diagonal, and two models of active 3D glasses.

There are approximately 43 Samsung television models with 3D capability, ranging across two different

screen types, various screen sizes between 40” and 65” and prices that range from

approximately $700 to $5,000.

Sony and Samsung offer 3D televisions that use “active shutter” technology – viewers wear highercost,

battery-powered glasses that create the 3D effect in part by sending a synchronized electric

voltage to a liquid crystal layer embedded within each lens of the glasses.

NAD, in considering the advertiser’s evidence, noted that LG’s “broad line claims are premised upon

a single test of the parties’ entry-level model 3D televisions” although the record was clear that all

three parties make several models of 3D televisions within their respective lines – from entry-level

models to high-end technological 3D sets – each configured with any number of combinations of

features and attributes.

Having found the consumer-perception evidence upon  which they were based to be materially

flawed, NAD recommended that the advertiser discontinue the claims that “4 out of 5” consumers

preferred LG’s passive 3D over Samsung’s active 3D for picture quality, color, overall 3D experience,

glasses, etc.  NAD also recommended that the advertiser discontinue its characterization of the

tested Samsung 6420 model as Samsung’s “leading model”

Similarly, NAD recommended that the advertiser discontinue its unsupported, unqualified

banner/brand advertisements claim that LG is “The First Choice for 3D TV, the “Clear Winner” and

related claims. NAD further recommended that the advertiser discontinue its falsely disparaging

claims: “HEY…SAMSUNG, YOUR 3D RESULTS ARE IN. AND IT’S NOT A PRETTY PICTURE” and (2)

“HEY…SAMSUNG, RECHARGEABLE GLASSES, WHAT’S NEXT, PEDAL-POWERED REMOTES?”

NAD further recommended that the advertiser continue its efforts to ensure that all advertising

materials containing its unsupported claim that consumers preferred LG 3D technology “3 to 1” over

Samsung 3D technology, be permanently discontinued.

Regarding the Sony challenge, NAD found that the evidence in the record was insufficient to provide

a reasonable basis for the advertiser’s sweeping claim that “4 out of 5” consumers preferred LG’s

passive 3D over Sony’s active 3D for picture quality, color, overall experience, etc.

NAD noted in its decision that the advertiser attempted to qualify the “4 out of 5” claim with

disclosures that noted the specific models tested.  NAD concluded, however, consumers could

interpret the claim to mean that – regardless of the model and features – “4 out of 5” consumers

preferred LG 3D televisions, a claim unsupported by the evidence. NAD recommended that these

claims be discontinued.

In both cases, NAD concluded that the advertiser provided a reasonable basis for the stand-alone

claim “Picture Perfect 3D from Any Angle” claim.

The company, in advertiser’s statements prepared for both cases, said that it disagreed with

recommendation that LG discontinue its 3D TV consumer preference claims.

“LG supported its claims with an innovative national consumer preference study that was designed

and administered by a leading ISO 9001:2008 certified survey research firm.  LG believes that the

study firmly established consumers’ overwhelming preference for the LG 3D television over the

challenger’s comparable 3D television.  …

“The advertising claims at issue in this challenge have run their planned course;  nevertheless, LG

respects the NAD self-regulatory process and will take the NAD’s views into consideration in its

advertising going forward,” the company said.

NAD’s inquiry was conducted under NAD/CARU/NARB Procedures for the Voluntary Self-Regulation of National Advertising.  Details of the initial inquiry, NAD’s decision, and the advertiser’s response will be included in the next NAD/CARU Case Report.

About Advertising Industry Self-Regulation: The National Advertising Review Council (NARC) was formed in 1971. NARC establishes the policies and procedures for the National Advertising Division (NAD) of the Council of Better Business Bureaus, the CBBB’s Children’s Advertising Review Unit (CARU), the National Advertising Review Board (NARB) and the Electronic Retailing Self-Regulation Program (ERSP).

The NARC Board of Directors is composed of representatives of the American Advertising Federation, Inc. (AAF), American Association of Advertising Agencies, Inc., (AAAA),  the Association of National Advertisers, Inc. (ANA), Council of Better Business Bureaus, Inc. (CBBB), Direct Marketing Association (DMA), Electronic Retailing Association (ERA) and Interactive Advertising Bureau (IAB).  Its purpose is to foster truth and accuracy in national advertising through voluntary self-regulation.

NAD, CARU and ERSP are the investigative arms of the advertising industry’s voluntary self-regulation  program. Their casework results from competitive challenges from other advertisers, and also from self-monitoring traditional and new media. NARB, the appeals body, is a peer group from which ad-hoc panels are selected to adjudicate NAD/CARU cases that are not resolved at the NAD/CARU level. This unique, self-regulatory system is funded entirely by the business community; CARU is financed by the children’s advertising industry, while NAD/NARC/NARB’s primary source of funding is derived from membership fees paid to the CBBB. ERSP’s funding is derived from membership in the Electronic Retailing Association. For more information about advertising industry self-regulation, please visit www.narcpartners.org.