New York, NY – Nov. 13, 2015 – The National Advertising Division has recommended that T-Mobile USA, Inc., discontinue express claims made in its “Ditch and Switch” advertising campaign that state the company will “pay off” “every last cent” customers owe on their devices if customers switch to T-Mobile. T-Mobile has said it will appeal NAD’s decision to the National Advertising Review Board.

NAD is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus.

In this case, NAD determined that T-Mobile’s claims that it would “pay off your phone,” that it will pay “every last cent,” and “cover every penny of your old device payment plans” expressly communicated that a consumer would receive a cash reimbursement from T-Mobile sufficient to “cover” the full amount of his or her device balance without having to pay out-of-pocket.

NAD noted in its decision that the evidence provided by the advertiser did not support the claims.

AT&T, a competing carrier, challenged T-Mobile’s advertising. Claims at issue included:

• “T-Mobile can set you free.  Now we’ll pay off your phone.  Yep, you heard us.  Every last cent.  Stuck in a contract?  We’ve got you covered there too.  Why wait?  Ditch your carrier [AT&T, Verizon, and Sprint shown on art card] and switch to the Un-Carrier today.”
• “SWITCH WITHOUT A HITCH.  NOW WE’LL PAY OFF YOUR PHONE when you trade it in.”
• On YouTube: “T-Mobile will pay off your phones and buy out your contracts, up to $650 per phone. That’s what we call Carrier Freedom. That’s what you call ‘holy $#*^, that’s awesome!’”
• We’ll cover every penny of your old device payment plans.
• T-Mobile will pay off your remaining phone payments from your old carrier.

NAD also considered whether the advertising at issue implied that consumers can switch from their existing carriers to T-Mobile without incurring any out of pocket costs, that T-Mobile will take over all of the consumer’s financial obligations to their existing carrier if they switch to T-Mobile, or that T-Mobile will cover all costs associated with the switch.

T-Mobile explained that the company announced in March 2015 that it would reimburse the full device pay-off amount of any customer who switches to T-Mobile and trades in an existing phone toward the purchase of a new one.

T-Mobile reimburses the customer through a bill credit for the value of the trade-in and a prepaid card equal to the difference between what the customer owes his or her former carrier on the device and the credit received for the trade in.  The prepaid card amount that the customer receives is determined by what is indicated on the final bill, submitted as part of the reimbursement process.

AT&T argued T-Mobile’s advertising mischaracterizes the nature of the program, which it contended provides for a delayed, partial reimbursement and fails to clearly and conspicuously disclose the steps consumers must take in order to make the switch.

T-Mobile maintained that the claims were accurate and truthful because participating consumers are made whole. Specifically, T-Mobile has “paid off” or “covered” the consumer’s remaining phone payments through the combination of a trade-in credit, plus a prepaid card – a total combined amount equivalent to the full amount of the outstanding balance owed to a customer’s previous carrier.

However, NAD said, under T-Mobile’s program “consumers must always incur out-of-pocket costs to pay off the outstanding balance owed to their previous carriers.”

NAD recommended that T-Mobile discontinue its express claims which state that T-Mobile will “pay off your phone,” and that T-Mobile will pay off “every last cent” or “cover every penny” of the consumer’s device payment plan when consumers switch to T-Mobile.

NAD also recommended that the advertiser discontinue its claim that it will reimburse consumers “up to $650 per phone.” because there is no limit on the total amount of reimbursement that a switching customer can receive.  NAD noted, however, that nothing in this decision precludes T-Mobile from accurately conveying that there is no limit on the total amount of reimbursement available to consumers.

In the absence of any evidence to the contrary, NAD concluded that reasonable consumers were not likely to construe “switch without a hitch,” as it appears in the context of the challenged advertising, to mean that they can switch to T-Mobile without incurring further liability to their current carriers.

T-Mobile, in its advertiser’s statement, said the company is disappointed by NAD’s findings and “will appeal all aspects of the decision to the NARB other than its conclusion that consumers are not confused by T-Mobile’s ‘Switch Without a Hitch’ claim.”

Note: A recommendation by NAD to modify or discontinue a claim is not a finding of wrongdoing and an advertiser’s voluntary discontinuance or modification of claims should not be construed as an admission of impropriety. It is the policy of NAD not to endorse any company, product, or service. Decisions finding that advertising claims have been substantiated should not be construed as endorsements.