Offering something for “free” is a powerful advertising tool. But as the National Advertising Division’s (NAD) recent decision in Case No. 7554 makes clear, conditions attached to “free” claims must be disclosed clearly and conspicuously.
Background
The Advertiser, a telecommunications company, ran a campaign advertising “Free Internet Forever” which promised qualifying customers free fiber-powered internet service for life if they obtained and maintained four mobile lines. The Challenger, a direct competitor in the home internet and wireless markets, challenged the campaign before NAD, arguing that the advertising overstated the offer and omitted material limitations consumers needed to make an informed decision. NAD found the core claim substantiated but recommended several modifications to ensure material conditions were clearly disclosed. The Advertiser agreed to comply.
Lessons for Advertisers
- A “free” claim generally requires more than small-print disclaimers.
NAD reaffirmed that “free” claims carry particular weight with consumers. Any condition that affects what consumers must pay, what they will receive, or whether they can obtain the advertised benefit must be clearly and conspicuously disclosed. The question is not whether the terms are technically available somewhere in the ad, but whether the disclosure is prominent enough and close enough to the “free” claim to prevent reasonable consumer misunderstanding.
Key Takeaway: Burying material conditions in fine print, hyperlinks, or FAQs is generally not enough. If a condition materially affects what “free” means to a consumer, it belongs near the main claim.
- Visual claims must be visually qualified.
The Advertiser’s TV ad included a voiceover explaining that consumers needed to “switch four lines” which adequately communicated the porting requirement. The on-screen text, however, said only “get 4 mobile lines” with no mention of porting. NAD found the on-screen claim inadequately qualified because qualifying information must match the format of the claim it qualifies.
Key Takeaway: Audit each format of your advertising independently. A compliant voiceover does not necessarily cure a deficient on-screen claim and vice versa.
- Costs tied to the “free” product must generally be disclosed even if they seem minor.
NAD found that advertising a service as “Free,” “$0,” or something consumers “never pay for” makes any associated charge material, including a one-time installation fee and certain regulatory charges. Because these costs directly contradicted the advertised offer, NAD required the Advertiser to disclose them in close proximity to the free internet claim.
Key Takeaway: If you advertise a product as free, any cost associated with obtaining or receiving it generally must be disclosed.
- A “free” bundled offer does not promise the required purchase will never increase in price.
The Challenger argued that “Free Internet Forever” was misleading because the Advertiser could raise mobile service prices down the road, making the total cost of receiving free internet higher over time. NAD disagreed. Because the Advertiser charged all customers the same mobile pricing rather than inflating it to recoup the cost of free internet, and because the claim made no express promise about future mobile pricing, NAD found the “forever” language was not illusory.
Key Takeaway: A “free” bundled-benefit claim does not, without more, promise that the price of a required co-purchase will stay constant. However, it is important to note that NAD may have reached a different conclusion here if it was presented with evidence that the cost of the underlying mobile service had been raised, inflated, or structured to recover the cost of providing free internet.
- Not every term needs prominent disclosure.
NAD declined to require the Advertiser to prominently disclose autopay requirements, same-day ordering rules, mobile activation fees, and the new-customer limitation because, according to NAD, consumers expect these kinds of conditions in a promotional telecom bundle.
Key Takeaway: Disclosure obligations are generally tied to materiality. Advertisers generally should focus on disclosing terms and conditions that would actually change how a consumer understands the deal.
What This Means for Advertisers
This case is a good reminder that “free” claims remain a high scrutiny area. Whether you are in the telecommunications space or any other industry, the principles apply broadly: material conditions must be disclosed clearly and near the claim, and any costs associated with obtaining the “free” benefit need to be made available for consumers before they pick up the phone or click “buy.” As always, our advertising team is happy to assist with reviewing promotional campaigns and helping to ensure your “free” claims are on solid footing before they go to market.
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