Yeah, you need to use a diffuser vinyl on the background, almost any background. We have also used the frost vinyl on the substrate, works almost the same as diffuser.
Depending on your letter size etc, you can router cut matt clear polycarb or similar and mount that inside your letters to also diffuse
the leds. This method is a lot of work, but if you need to have the glossy background, this is a good way to resolve that. Good luck!