Comcast (NASDAQ:CMCSA) should stop claiming its Xfinity broadband service "delivers the fastest internet in America," and that it offers the "fastest, most reliable in-home WiFi," according to the National Advertising Division, an investigative unit of the Advertising Self-Regulatory Council that is administered by the Council of Better Business Bureaus. The group investigated Comcast's claims at the behest of competitor Verizon Communications (NYSE:VZ).
Essentially, one big, heavily disliked internet service provider (ISP) that has been known to make its own bold claims in its ads has called foul on another. In theory, this is about protecting consumers, but a term like "fastest internet" has been so misused for so long that it's hard to imagine most Americans don't automatically regard any claim with a heavy dose of skepticism.
This is like a local pizza place claiming to be "famous" or "award-winning." There might be some truth to the claim, but it's hardly a verifiable fact.
What was Comcast saying?
The cable and internet giant based its claim from crowd-sourced data taken from Ookla's Speedtest application.
"At issue in this case is whether there is a good fit between Comcast's unqualified fastest internet speed claim and its supporting evidence: crowd-sourced data (and an 'award' given by the third party which collected that data)," NAD wrote. NAD noted in its decision that even where methodology is reliable for one purpose, it may not be sufficient substantiation for advertising claims made in a different context.
The watchdog group pointed out that Comcast offers a variety of Xfinity speed tiers and prices, but its ads do not distinguish between them. It found that the company's ads, both print and broadcast, "conveyed a message of overall superiority -- that regardless of which speed tier purchased by a consumer, in a head-to-head comparison, XFinity would deliver faster speeds."
NAD also pointed out that Ookla's "fastest Internet in America" award is intended to show the "top-end performance of a given ISP." Its findings noted that Ookla's "methodology wasn't a good fit for the purposes of substantiating Comcast's overall superior speed performance."
NAD recommended the claim be discontinued and Comcast is appealing appeal the decision. Whether it wins an appeal or not, NAD has no official legal standing
The watchdog also came to a similar conclusion regarding Comcast's "fastest in-home WiFi" claim and has also asked it to stop making it in ads.
What does this mean?
NAD essentially exists to stop companies from making claims that lack reasonable backup. The group is not saying that Comcast does not have the fastest internet or the best in-home Wi-Fi. It's just saying it has not proven that it does.
It's hard to put a lot of stock in a watchdog group that the industry does not have to abide by, but, hopefully, this at least serves as a way of shaming Comcast a bit. Using misleading stats or ones that support the conclusion you hope to reach has been a cornerstone of internet and wireless industry advertising.
However, consumers deserve ads that base their claims on verifiable facts, not selective interpretations. Comcast is wrong here and Verizon gets some credit for being the whistle-blower, but as the old saying goes, "People who live in glass houses should not throw stones." In fact, last month the roles were switched when Comcast complained to NAD and its National Advertising Review Board asked Verizon to change its ad wording about its having the "fastest and most reliable Internet."
Daniel Kline has no position in any stocks mentioned. He claims to be the fastest at nothing. The Motley Fool owns shares of and recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.