LG Won’t Appeal NAD Decision on Misleading 3D TV Ads

Samsung and Sony responded this week with expected support for the decision by the National Advertising Division (NAD) of the Council of Better Business Bureaus recommending that LG discontinue advertising claims made at the expense of its 3D rivals for the company’s Cinema 3D TVs and 3D glasses. “We are pleased with NAD’s careful review of the facts, and agree that its recommendations are appropriate,” a Samsung spokesman said. A Sony spokesman told us that the company had nothing to add to the NAD decision, which, he said, “stands on its own.”

In its defense, LG said it backed up its claims with an “innovative national consumer preference study” that was designed and administered by a leading ISO 9001:2008 certified survey research firm. “LG believes that the study firmly established consumers’ overwhelming preference for the LG 3D television over the challenger’s comparable 3D television,” the manufacturer said. A company spokesman told us, “Bottom line, LG has decided not to appeal the NAD’s recommendation. We still stand by the claims, but this was a 2011 marketing campaign which has now concluded."

NAD issued a statement last week recommending that LG discontinue advertising claims made for the company’s passive Cinema 3D Television and 3D glasses. Advertising claims made by LG in Internet and TV advertising, press releases and dealer-directed communication were challenged separately by Sony and Samsung over claims of consumer preferences for passive versus active 3D TV in head-to-head comparisons, NAD said.

Sony and Samsung challenged LG assertions that “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Overall 3D Experience,” “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Brightness,” “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Color,” “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Picture Quality,” “4 out of 5 People Choose LG Cinema 3D over Sony and Samsung for Glasses,” “Consumers favor passive 3D technology, like LG Cinema 3D, because they prefer every aspect of the passive 3D TV experience” and “Consumers’ clear preference for passive 3D” has been demonstrated by “independent, unbiased research."

The key issue in both cases was whether the consumer perception evidence submitted by LG could support its advertising claims, NAD said. NAD examined the conditions under which consumers viewed the 3D TVs -- including viewing distance and angle, screen sizes, panel refresh rate and the resolution of the 3D televisions tested, as well as the 3D glasses, NAD said. In its consideration of Samsung’s challenge, NAD also reviewed the structure of LG’s consumer perception questionnaire.

LG’s “broad line claims are premised upon a single test of the parties’ entry-level model 3D televisions,” NAD concluded, although the record “was clear that all three parties make several models of 3D televisions within their respective lines -- from entry-level models to high-end technological 3D sets -- each configured with any number of combinations of features and attributes."

NAD determined that the consumer-perception evidence on which claims were based were “materially flawed,” and it recommended that LG discontinue the claims that “4 out of 5” consumers preferred LG’s passive 3D over Samsung’s active 3D for picture quality, color, overall 3D experience, glasses, etc. NAD also recommended that the advertiser discontinue its characterization of the tested Samsung 6420 model as Samsung’s “leading model,” it said.

NAD also recommended that LG stop “unsupported, unqualified” brand ads’ claim that LG is “The First Choice for 3D TV,” the “Clear Winner” and similar other boasts. It also recommended that LG halt its “falsely disparaging claims,” including “Hey SAMSUNG, your 3D results are in and it’s not a pretty picture” and “Hey Samsung…, rechargeable glasses, what’s next? Pedal-powered remotes?” In another recommendation, NAD suggested that LG cease advertising materials containing its “unsupported claim” that consumers preferred LG 3D technology “3 to 1” over Samsung 3D technology.

In the Sony challenge, NAD said the evidence in the record was “insufficient to provide a reasonable basis” for LG’s “sweeping claim” that four out of five consumers preferred LG’s passive 3D over Sony’s active 3D for picture quality, color, overall experience, etc. LG attempted to qualify the “4 out of 5” claim with disclosures that noted the specific models tested, NAD said, but consumers could interpret the claim to mean that -- regardless of the model and features -- “4 out of 5” consumers preferred LG 3D televisions, “a claim unsupported by the evidence.” NAD recommended that these claims “be discontinued.” LG did get support for viewing angle claims. In both cases, NAD concluded that the advertiser provided a reasonable basis for the stand-alone claim “Picture Perfect 3D from Any Angle."

As a result of the investigation into the false LG ad claims, Sony got a public reprimand from NAD for what the agency called violations of “the procedures that govern the advertising industry’s system of self-regulation.” NAD rules “make clear that parties are prohibited from using NAD decisions for promotional purposes,” the agency said. Parties also are required to “maintain confidentiality regarding the process until a decision is made public,” as it was last Thursday, it said. “NAD learned that a Sony executive contacted customers regarding the outcome” of the LG case “in advance of NAD’s decision,” it said. “Further, NAD determined that the executive’s communication represented a promotional purpose.” Sony spokesman Rob Manfredo confirmed that a Sony executive who he wouldn’t identify sent retailers a letter about NAD’s disposition of the LG case because “we felt compelled to inform the dealers.” But “we disagree with NAD’s belief” that the letter violated confidentiality rules or was promotional in nature. Still, Sony commends NAD for the role it played in “stopping LG’s false advertising,” he said. He declined to give us a copy of the letter.

News of NAD’s decision against LG happened to coincide with the release of a ruling by the U.K.’s Advertising Standards Authority upholding a Samsung complaint that LG misled the public when it marketed its passive 3D TVs as having full HD 1080p resolution. Samsung believes that since the 1080 lines of resolution on an LG 3D TV set are “split between the left and right eyes, the 1080-line resolution was then halved when viewing the screen in 3D mode” through passive glasses, the ASA said. The ASA found LG in its ads would have been “accurate to describe” its screens as 1080p, “providing additional information was supplied to make clear that this was delivered to consumers using passive technology when in 3D mode,” it said. Since the ads lacked that “further qualification,” the ASA deemed them “misleading” and asked LG to pull them in their “current form,” it said: “We told LG to make clear that its product uses passive 3D technology.” Representatives of LG in the U.K. didn’t immediately comment.