NAD Finds Certain T-Mobile Device Financing Claims Supported; T-Mobile Appeals Recommendations to Discontinue or Modify Others
New York, NY – July 27, 2023 – In a challenge brought by AT&T Services, Inc., the National Advertising Division (NAD) of BBB National Programs determined that certain claims made by T-Mobile US, Inc. in its “Phone Freedom” advertising campaign were supported. However, NAD recommended that T-Mobile discontinue certain comparative phone upgrade claims and modify claims related to the availability of device deals to both new and existing customers and disclosures used in connection with T-Mobile’s payoff and free phone offers.
The claims at issue appeared in various media, including television commercials, a radio advertisement, and on T-Mobile’s website. To incentivize customers to switch to T-Mobile, the “Phone Freedom” campaign advertises that T-Mobile will pay off a customer’s phone contract and give a free 5G smartphone to customers who switch to T-Mobile’s Go5G Plus Plan.
NAD found T-Mobile’s claim “AT&T & Verizon require three-year device financing to get their best offers & you lose your promo credits if you upgrade after two years” to be supported.
NAD concluded that a message reasonably conveyed by T-Mobile’s claims that “AT&T and Verizon rope you in with phone offers then bind you to a three-year device contract” and “You’re upgrade ready a year earlier” is that AT&T customers financing their phone from AT&T are unable to upgrade their phone until the expiration of their three-year phone contract.
Because this message overstates an AT&T customer’s inability to upgrade and the upgrade advantage offered by T-Mobile and is not supported by evidence in the record, NAD recommended that these claims be discontinued and that T-Mobile modify its advertising to avoid conveying the unqualified messages that AT&T customers are only able to upgrade their phone every three years and that T-Mobile customers can upgrade their phones one year earlier than AT&T customers.
NAD noted that nothing in its decision prohibits T-Mobile from making truthful claims that its installment plan contracts have a standard two-year term that positions T-Mobile customers to upgrade their phone without a loss of promotional credits one year earlier than AT&T customers who are financing their phone pursuant to a phone deal from AT&T.
New and Existing Customers Claim
NAD evaluated the claim “Introducing Go5G Plus, the first plan that always gives new and existing customers the same great device deals” and determined that customers may reasonably take away a message that T-Mobile’s Go5G Plus plan is the first plan that allows new and existing customers to presently get all the same device deals – a message not supported by the record.
NAD recommended that T-Mobile modify the claim to clearly convey that the Go5G Plus plan is the first plan that provides that future device deals will be equally available to new and existing customers.
Payoff and Free Phone Claims
T-Mobile advertises that it will pay off a customer’s phone contract and give a free 5G smartphone to customers who switch to T-Mobile’s Go5G Plus plan. NAD considered whether T-Mobile adequately discloses material limitations on these offers.
NAD found that T-Mobile sufficiently disclosed in its Locked television commercial that its payoff offer is limited to an amount up to $650 but recommended that T-Mobile modify its radio and website advertisements to disclose the up to $650 limitation in the claim itself or in similar font size and in immediate proximity to the claim.
Further, to avoid conveying a misleading message that T-Mobile will provide a new customer with any of the latest 5G smartphones for free, NAD recommended that T-Mobile clearly and conspicuously disclose the up to $830 price limitation in close conjunction with the free phone claims.
In its advertiser statement, T-Mobile stated that it will appeal NAD’s decision because it believes that “T-Mobile’s advertising truthfully conveys the many benefits available to customers as a result of Phone Freedom.”
Appeals of NAD decisions are made to the BBB National Programs’ National Advertising Review Board (NARB), the appellate truth-in-advertising body of BBB National Programs.
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