New York, NY – Jan. 25, 2012 -The National Advertising Division of the Council of Better Business

Bureaus has recommended that Verizon Wireless discontinue the advertising claims that its 4G LTE

Smartphones are “twice as fast as any AT&T smartphone.”

AT&T challenged the claim before NAD, the advertising industry’s self-regulatory forum, and argued

that consumers viewing the challenged advertisements would interpret the claim to mean what it

literally states: Verizon’s 4G LTE smartphones work twice as fast as any AT&T smartphone in all

respects.

AT&T asserted that this claim was literally false because the device processor speeds of the

smartphones offered by AT&T are as fast as, or faster than, the device processor speeds of Verizon’s

smartphones.  In addition, the challenger argued that the context in which the “twice as fast” claim

appears does not make clear to consumers that the “twice as fast” claim is based on network speed,

rather than the speed of the actual smartphones depicted.

The advertiser argued that, when viewed in the context of the challenged advertisements and the

marketplace as a whole, consumers would understand that the phrase “twice as fast” referred to

network speed, not the processing speed of the featured Smartphones.

However, neither party submitted consumer perception evidence regarding the message conveyed

by the challenged claim and NAD stepped into the shoes of the consumer to determine the messages

conveyed.

Following its review of the advertising at issue, NAD determined that at least one reasonable

interpretation of the “twice as fast” claims is that Verizon’s Smartphone’s perform all tasks (including

those which depend on the processor speed of the phone) “twice as fast” as any AT&T Smartphone –

a claim that was not supported by the evidence in the record.

NAD next considered the advertiser’s argument that NAD should evaluate the “twice as fast” claim in

the context of the challenged advertisements and in the context of a consumer’s understanding of

the marketplace.  In particular, the advertiser argued that wireless carriers frequently make speed

references regarding smartphones, similar to those  challenged here, where such references are

clearly to network – not processor – speed.  In addition, the advertiser argued that when device

processor speed is the focus of an advertisement, wireless carriers and cell phone manufacturers

emphasize this fact by expressly referring to the device processor speed.  According to the

advertiser, it is therefore reasonable to expect that consumers will understand the reference to

speed in the challenged advertisements as network speed.  NAD did not agree.

NAD then considered the advertiser’s argument that the basis of comparison for the “twice as fast”

claim was made clear by a disclosure: “Twice as Fast compares expected speeds of Verizon 4G LTE

smartphones operating in 4G LTE markets vs. AT&T smartphones operating in HSPA+ markets.”

NAD determined that the advertiser’s disclosure was insufficient to adequately qualify the challenged

advertisements’ prominent, overarching message that Verizon’s 4G LTE Smartphones are, overall,

twice as fast as any AT&T Smartphone. NAD recommended that the advertiser modify the challenged advertisements to make the basis of

comparison for the “twice as fast” claim clear to consumers by adding it to the main claim rather

than providing the basis of comparison in a fine-print disclosure.

Verizon Wireless, in its advertiser’s statement, said the company “continues to believe that its

advertising was appropriate, consistent with past industry practice, and properly understood by

consumers as referring to the relative speeds of the networks upon which its and AT&T’s

smartphones operate … .”

However, the company noted, “the specific claims challenged are no longer being utilized.  Verizon

Wireless agrees to take the NAD’s decision into account in future advertising.’

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.