NAD Recommends Spectrum Disclose Limitations to Comparative Savings Claims for Spectrum Mobile Following T-Mobile Challenge; Advertiser to Appeal

New York, NY – Sept. 9, 2019 – The National Advertising Division recommended that Charter Communications, Inc. d/b/a Spectrum modify comparative savings claims, encouraging consumers to switch from T-Mobile to Spectrum Mobile, to clearly and conspicuously disclose limitations on the offer and material differences between the services.  The claims were challenged by T-Mobile USA, Inc. and appeared in commercials that aired on television and the internet (including on YouTube) as well as Spectrum’s website.

NAD is an investigative unit of the advertising industry’s system of self-regulation and is a division of the BBB NP’s self-regulatory and dispute resolution programs.

The claims challenged by T-Mobile included:

Express claims:

  • Switching to Spectrum Mobile from T-Mobile could result in annual savings of up to $300.
  • Switching to Spectrum Mobile from T-Mobile and other competitors could result in savings of up to 40%.
  • T-Mobile offers “confusing deals with catches,” and Spectrum Mobile does not.
  • To get a deal with T-Mobile, consumers must sign up for at least four lines.
  • Spectrum Mobile’s “Unlimited” data plan has “No data usage limits.”
  • Spectrum Mobile provides “the best value.”
  • Spectrum Mobile is built on America’s “largest, most reliable LTE network.”
  • Spectrum Mobile is built on “the best network.”

Implied claims:

  • The total out-of-pocket monthly cost for Spectrum Mobile with unlimited data is $45 per line.
  • There are no material differences between Spectrum Mobile’s unlimited data plan that costs $45 per month for one line and T-Mobile’s unlimited data plan that costs $70 per month for one line.
  • The advertised monthly price for Spectrum Mobile includes taxes and fees.

This challenge centered around claims that Spectrum offers consumers savings “up to 40%” or “up to $300 annually” and provides the “best value.” T-Mobile argued that Spectrum’s advertising conveys the misleading message that its Spectrum Mobile service is a better deal than T-Mobile’s by making a price comparison that ignores material differences between the two companies’ unlimited plans, as well as misstates what T-Mobile offers.  Spectrum countered that its advertising touts a price of $45 per line per month, delivering a discount of up to 40% to consumers, whereas T-Mobile and other companies charge significantly more for a single line subscription.  It was Spectrum’s position that no reasonable consumer would believe that the $45 per line per month price includes the cost of Spectrum internet.  NAD noted that the product is not sold as a bundle with Spectrum Internet and it is not a fee that is billed with the product. Instead, it is a tied product: in order to purchase Spectrum Mobile, consumers must also purchase Spectrum Internet.  Although this is disclosed, NAD found that the disclosures were not easy to notice, read and understand and recommended that the advertiser increase the size and prominence of its disclosures.

With regard to claims that switching to Spectrum Mobile will result in annual savings of “up to $300” or “up to 40%,” or that Spectrum Mobile provides the “Best Value,” NAD recommended that Spectrum’s savings claims be modified to limit the claims to the support provided (i.e. that consumers with one line of service can achieve the claimed savings).

Further, NAD considered whether a comparison of T-Mobile’s cell phone service to Spectrum Mobile requires disclosure of the many benefits T-Mobile offers.  NAD noted that although T-Mobile ascribed a value to the benefits it touted, it submitted no evidence demonstrating that the differences were material to consumers, for example that consumers used all of the benefits available or the frequency of their use.  Therefore, NAD concluded that all of the other ancillary benefits that T-Mobile offers its customers, such as free Netflix subscription, T-Mobile Tuesdays, or an opportunity to obtain a free MLB.TV subscription, do not render the broad savings claim (“up to 40% off”) an “apples-to-oranges” comparison requiring the disclosure of material differences.

However, NAD recommended that Spectrum disclose, clearly and conspicuously, Spectrum Mobile’s data usage limits and discontinue the claim that Spectrum Mobile’s unlimited plans have “no data usage limits,” and disclose that there are differences in data usage limitations between Spectrum Mobile and competing providers.  The record showed that three wireless companies, AT&T, Verizon, and Sprint, offer unlimited plans with higher caps.  In addition, T-Mobile’s data usage threshold is much higher at 50 GB than Spectrum Mobile’s.

NAD considered the message communicated by the “Attic Reception” commercial, which states that Spectrum’s competitors charge taxes and fees, but does not name any specific wireless provider or contain any disclosure or limitations about which provider is being compared. NAD determined that consumers can reasonably take away the message that the comparison is to all major competitors, including T-Mobile. It is undisputed that the majority of cellular carriers charge taxes and fees, even though T-Mobile does not and Spectrum has ceased to do so.  Therefore, NAD recommended that the advertiser modify the “Attic Reception” commercial to specify the providers compared and otherwise avoid implying that T-Mobile charges taxes and fees.

Although the “Monsters Diner” and “Thesaurus” commercials were discontinued, NAD did not receive written assurance that the claims had been discontinued.  Therefore, pursuant to ASRC rules, NAD reviewed the advertisements at issue.  NAD determined that the challenged advertisements convey the message that anyone paying for less than four lines pays $70 per line to T-Mobile. However, because T-Mobile offers a deal for consumers purchasing two or three lines, this claim is not supported.  Therefore, NAD recommended that Spectrum discontinue implied claims that T-Mobile does not offer deals for consumers purchasing two or more lines of services.  With regard to the “Monsters Diner” commercial, NAD concluded that the claim “confusing deals with catches are evil. Spectrum Mobile doesn’t do that,” followed by the tagline “T-Mobile bad. Spectrum good” conveys the unsupported message that T-Mobile offers confusing deals with catches, and NAD recommended that it be discontinued.

Finally, Spectrum agreed to modify its “Best Network” and “Most Reliable Network” claims to be consistent with NAD precedent (NAD Case #6272).  The modified claims will be treated, for compliance purposes, as if NAD had recommended the modifications and the advertiser had agreed to comply. In its advertiser’s statement, Spectrum stated that is “pleased NAD determined that the Spectrum Internet fee is not part of Spectrum Mobile services and that it need not be included in Spectrum’s advertised price of $45 per month. Spectrum also believes T-Mobile’s supposed ‘benefits’ are immaterial and it appreciates NAD’s finding that there is insufficient evidence they need to be referenced in Spectrum’s price comparisons. For myriad reasons, Spectrum respectfully disagrees with NAD’s remaining findings and will appeal them to NARB.”