NAD Recommends Sprint Discontinue Challenged TV Ads Offering ‘50% Off,’ Modify Claims in Internet, In-Store Advertising Following T-Mobile Challenge

New York, NY – June 3, 2016 – The National Advertising Division has recommended that Sprint Corporation discontinue challenged broadcast advertising that promises savings of 50 percent to consumers who switch to Sprint from competing wireless service providers.  NAD also recommended that Sprint modify challenged Internet and in-store advertising to clarify the basis for price comparisons and better disclose its $36-per-line activation fee.

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

Express and implied pricing claims made in broadcast, radio, Internet and social media advertising by Sprint Corporation were challenged by T-Mobile USA, Inc.

NAD examined express claims that included:

•  “[C]ome save 50% on most Verizon, AT&T or T-Mobile rates.”
• “Switch to Sprint and Save 50% on Your Monthly Rates.”
• “Cutting your rate plan by 50 percent is easy.”
• “[W]e’re inviting you to join Sprint for the biggest offer in U.S. wireless history, switch to Sprint and save 50% on most Verizon, AT&T or T-Mobile rates, you heard that right, no gimmicks, no tricks, you have Verizon’s 6 gigs for $60, 40 with Sprint and if you have 15 gigs for $100 from AT&T, 50 with Sprint, even if you have T-Mobile’s 10 gigs for $80, we’ll give it to you for $40 and we won’t force you to watch video in low def….”
• “[W]e are gonna cut some prices in half. Switch to Sprint and save 50% on Verizon, AT&T, or T-Mobile rates.”

NAD also considered whether the advertising at issue implied that Sprint will charge a customer who switches from T-Mobile or MetroPCS half of what the customer is currently paying for wireless service, that customers who switch from T-Mobile receive the same rate plan benefits with Sprint, or that there are no material differences between Sprint’s “50% off” plan and a consumer’s current T-Mobile plan.

NAD determined that the challenged television commercials reasonably conveyed the message that consumers can expect to retain the same benefits but reduce their bill by 50 percent when they switch from their current provider to Sprint.

While the advertiser argued that the references to “rates” and images of rate plans make the intended basis of comparison clear, NAD disagreed.  NAD determined that references to the limitations are blurred by the fast-moving audio and visual elements of the commercials which also make the supers, which refer to rate plans as well as limitations and restrictions, difficult to read, notice and understand.   NAD determined that the overriding message – that you can have the same rate plan for half the price simply by switching to Sprint – was not supported by the evidence in the record and recommended that the commercials be discontinued.

NAD determined that Sprint’s Internet advertising and in-store promotional advertising reasonably conveyed the message that Sprint’s rate plans are 50 percent less than those of competing carriers and found that the advertiser provided a reasonable basis for its “50% off most T-Mobile rate plans” claim. However, NAD recommended that Sprint modify the claim to clearly and conspicuously state the basis of its comparison, namely the T-Mobile’s Simple Choice rate plan 2GB, 6GB and 10GB.

NAD recommended that Sprint modify Internet and in-store materials to better disclose that consumer are charged an activation fee of $36 per line when they switch. Although that information is available at an “important information” hyperlink, both the Federal Communications Commission and the Federal Trade Commission have recognized that consumers are concerned about not only about their rates, but how rates, “along with all additional fees and charges, will ultimately be reflected in the charges they see on their monthly phone bill.”

This one-time activation fee is more than the base price of both Sprint’s 2GB and 6GB plans, NAD noted, and without a clear and conspicuous disclosure of the fee, consumers could be misled by Sprint’s offer of 50 percent off their current rate plan.

NAD also recommended that Sprint clearly and conspicuously disclose the material differences in its plans versus those offered by T-Mobile in close proximity to claims that reference “50% off.”

During the course of the review, Sprint notified NAD that it had permanently discontinued its “cut your bill in half” claims. Based on the advertiser’s representation, NAD did not review these claims on their merits.  The voluntarily discontinued claims will be treated, for compliance purposes, as though NAD recommended their discontinuance and the advertiser agreed to comply.

Sprint, in its advertiser’s statement, said the company “agrees to comply with NAD’s recommendations.”

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.