In a challenge brought by T-Mobile, the National Advertising Division recommended that Sprint discontinue claims referencing a “new,” “brand new,” “all new,” “built from the ground up,” or “America’s Newest” network, as well as a claim that “Sprint is the most improved U.S. company in customer satisfaction, across all 43 industries, over the last six years.”
Although the NAD noted that no industry standard exists as to how to evaluate which network is the “newest,” it was unmoved by Sprint’s contention that its network was the newest based on its efforts to modernize by dismantling an old network and not just upgrading an existing network.
Sprint made fundamental changes to its legacy network, NAD acknowledged, but the company’s claims reasonably conveyed to consumers an overly broad message in comparison to the actual enhancements that were made. T-Mobile submitted a consumer perception survey that found claim language such as “from the ground up” led consumers to believe the changes included entirely new equipment that included cell towers.
Such phrases “clearly draw consumers’ attention to those pieces of a network that are, in fact, on the ground,” NAD noted, and while industry experts may understand that cell towers—like the Empire State Building—are not all new, Sprint’s advertising did not on its face exclude those portions of a network.
The use of the term “new” was also outdated, the decision added, as Sprint began using the claim in September 2013. An incremental national rollout was an insufficient reason to continue use of the phrase, NAD said. Since Sprint chose September 2013 as the “release” date, it “cannot then continue to use the term ‘new’ for multiple years. Sprint’s strategic decision to begin advertising its network as ‘new’ at a point when the core backbone of the new network was complete across the majority of its national footprint, rather than upon full completion of the build out, does not give Sprint license to continue advertising its network as ‘new’ during the entirety of the project’s implementation regardless of how long it takes.”
One message reasonably conveyed by the “America’s Newest Network” claim is that Sprint’s ‘new’ network makes it automatically superior to its competitors, NAD also found. “[C]onsidered within the context of the advertisements as a whole, which encourage consumers to ‘switch’ to Sprint, the clear import of the claim is that there is some consumer benefit to signing up with ‘America’s Newest Network’ beyond the mere fact that Sprint’s network is temporally the most recent,” NAD wrote, particularly as consumers have come to expect constant technological innovation.
Self-comparative performance claims of “faster data speeds,” “fewer dropped calls,” and “better call quality” also failed to pass muster. Sprint’s print advertisements “use a tiny bottom-of-the-page disclosure” that was insufficient to qualify the claims, NAD said, leaving consumers with the reasonable—yet unsupported—takeaway that Sprint has “better call quality” than competitor networks.
Other Sprint internet claims did not comport with the Federal Trade Commission’s revised “Dot Com” Disclosure Guidelines, according to the decision, which mandates that disclosures that are an integral part of a claim cannot be separately communicated via a hyperlink – as Sprint did with its flash ads.
Finally, NAD turned to Sprint’s consumer satisfaction rating claims based on ASCI scores. “Sprint’s claim is literally truthful in that Sprint obtained an 8-point increase between its current ASCI score (68) and its ASCI score in 2008 (56), which is the biggest improvement that any company evaluated by ASCI has had over its 2008 score.” “NAD was nevertheless concerned that the claim implies continued year-to-year improvement, which is not the case.”
Sprint’s ASCI score dropped by three points from 2013 to 2014 and has dropped four points since 2011, with no improvement in the last three years. “Thus, although the claim is literally truthful, by selectively referencing data from 2008 and ignoring more recent data that actually shows an annual decline in customer satisfaction since 2011, the claim does not accurately convey Sprint’s track record of customer satisfaction ratings in a way that is consumer meaningful,” the self-regulatory body wrote.
To read NAD’s press release about the case, click here.
Why it matters: A resounding loss for Sprint, the NAD decision emphasized that it was important to keep claims consumer relevant, to avoid making unsupported, overly broad messages and to provide clear and conspicuous disclosures when qualifying claims that are easy for consumers to notice, read, and understand.