NARB Recommends T-Mobile Better Disclose to Consumers Terms of ‘Ditch & Switch’ Ad Campaign

New York, NY – Aug. 3,  2016 – A panel of the National Advertising Review Board (NARB) has recommended that T-Mobile USA, Inc., better disclose to consumers the terms of the company’s “Ditch and Switch” campaign, and either modify or discontinue claims that cap consumer reimbursements at $650.

NARB is the appellate unit of the advertising industry’s system of self-regulation and administered by the Council of Better Business Bureaus.

T-Mobile’s claims were initially challenged by AT&T Services, Inc., a competing provider of cell-phone services.

In the underlying case, NAD found that the challenged claims reasonably communicated a message that consumers switching to T-Mobile would receive a cash reimbursement from the company in an amount sufficient to cover the full amount of the consumer’s device balance with its previous carrier without the consumer having to pay out-of-pocket, a message that NAD determined was not supported by the evidence in the record.

NAD recommended that T-Mobile discontinue claims that it will “pay off your phone,” “pay off every last cent,” or “cover every penny” of the consumer’s device payment plan with its previous carrier when the consumer switches to T-Mobile. The NAD also recommended that T-Mobile discontinue its claim that it will reimburse consumers up to $650 per phone based on T-Mobile’s representation that there was no limit on the amount of money that would be reimbursed. T-Mobile appealed from both of these recommendations.

A key question for the NARB panel was whether or not the “pay off” claims were literally false based on the manner in which T-Mobile reimburses consumers under its “Ditch and Switch” program.

A majority of the panel determined that, with appropriate explanatory language – clearly and conspicuously disclosed in the body of the advertisement – consumers would understand a claim that T-Mobile will “pay off” the consumer’s old phone as indicating that consumers would receive full value for the amount owed to their previous carrier through receipt of a trade-in credit and prepaid card.

However, the panel found that the language used by T-Mobile to describe how a consumer would be reimbursed (e.g., “Payoff: trade-in credit and prepaid card”) was not sufficiently conspicuous and did not adequately explain how the reimbursement program worked.

A majority of the panel determined that, to properly qualify these claims and avoid an erroneous message, it is necessary to clearly and conspicuously disclose in the body of the advertisement that the “pay off” comes as a trade-in credit and prepaid card. A majority of the panel also found it necessary to include clear and conspicuous disclosures that explain  that the credit may only be used to pay the consumer’s obligations to T-Mobile as well as the time period in which the consumer would receive the trade-in credit and prepaid card.

Several of the challenged advertisements state that T-Mobile will pay “up to $650” for amounts owed to the consumer’s previous carrier when the consumer switches to T-Mobile. However, the record indicated that T-Mobile does not impose any limits on the amount that it will reimburse for what is owed to a previous carrier for the consumer’s phone.

A majority of the panel found that the challenged “up to $650” claim reasonably conveyed the message that $650 was the maximum T-Mobile would pay toward the consumer’s obligations to a previous carrier. A majority of the panel agreed with the NAD that any limits on the amount T-Mobile will pay are a material part of T-Mobile’s offer and must be truthfully and accurately disclosed. The panel recommended that the challenged “Up to $650” claims be discontinued or modified so that any limits as to what T-Mobile will reimburse to consumers are truthfully and accurately disclosed.

T-Mobile, in its advertiser’s statement, thanked the panel “for its thoughtful consideration of the issues” and said it would take the panel’s “recommendations into account in formulating its future advertising.”

Note: A recommendation by NARB 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.