If something seems too good to be true, it probably is — and the old adage may very well apply to T-Mobile if allegations of “deceptive advertising” are true.
An investigation by Washington state Attorney General Bob Ferguson discovered that although T-Mobile was touting a no-annual-contract policy, consumers who cancelled their phone plans would be forced to pay a substantial penalty.
Under the court order issued by Ferguson’s office, America’s Un-carrier is obligated to be up-front about the “limitations” of its recently introduced no-contract wireless service plans. The order, which was signed by T-Mobile, allows customers “duped by the deceptive ads” to end their contracts without being subject to termination fees.
The offer applies to anyone who purchased a cellphone between March 26 and April 25 as long as the cancellation follows the terms of the agreement and the customer returns the phone to T-Mobile.
“As Attorney General, my job is to defend consumers, ensure truth in advertising, and make sure all businesses are playing by the rules,” Ferguson said in a statement. “My office identified that T-Mobile was failing to adequately disclose a critical component of their new plan to consumers, and we acted quickly to stop this practice and protect consumers across the country from harm.”
T-Mobile, which is headquartered in Bellevue, Wash., announced last month that it was doing away with subsidized pricing plans and contracts in favor of pre-paid plans and was offering the most popular Smartphones for what it described as the lowest up-front cost.
“These bold moves serve notice that T-Mobile is canceling its membership in the out-of-touch wireless club,” said T-Mobile USA president and CEO John Legere in a statement during last month’s launch of its new model. “This is an industry filled with ridiculously confusing contracts, limits on how much data you can use or when you can upgrade, and monthly bills that make little sense. As America’s Un-carrier, we are changing all of that and bringing common sense to wireless.”
Ferguson’s office, however, said T-Mobile’s claims of “no restrictions” and “no annual contract” are misleading because, to qualify for that plan, customers must provide their own cellphones.
Customers who get a phone from T-Mobile must either pay a monthly rate for 24 months or pay for the phone up front. Any customer who tries to leave before the two years are up must pay the full balance owed on the device, a statement from the Attorney General’s Office revealed. Depending on how early a customer, canceled, he could even be hit with termination fees that exceed those of other wireless carriers.
T-Mobile is maintaining that it has done nothing wrong, but will follow the attorney general’s orders.
“As America’s Un-carrier, our goal is to increase transparency with our customers, unleashing them from restrictive long-term service contracts —this kind of simple, straight-forward approach is core to the new company we are building,” T-Mobile said in a statement. “While we believe our advertising was truthful and appropriate, we voluntarily agreed to this arrangement with the Washington AG in this spirit.”
The company has also been ordered to pay the $26,000 legal bill incurred by the Attorney General’s Office.
The conditions T-Mobile must meet under the Assurance of Discontinuance document, as written by the Attorney General’s Office, are:
• The company agrees not to misrepresent consumers’ obligations under its contracts, including those contracts that have not restrictions or limitations; and
• The company agrees not to fail to adequately disclose that customers who terminate their T-Mobile wireless service before their device is paid off will have to pay the balance due on the phone at the time of cancellation.
• The company also agrees that it will not misrepresent customers’ true obligations under the terms of its contracts for the sale of service or equipment;
• The company also agrees that it will make clear the consequences of cancelling T-Mobile service, including restrictions or limitations on cancellation; fees and costs; and early termination fees;
• The company also agrees that it will more clearly state in all advertisements the true cost of telephone equipment, including the requirement the customer carry a wireless service agreement for the life of the 24-month financing plan;
• The company also agrees that it will instruct representatives to fully disclose obligations under the terms of its contracts, including developing a “Frequently Asked Questions” page; and
• The company also agrees that it will train customer service representatives to comply with the settlement within 21 days of signing.
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T-Mobile’s ‘No-Contract’ Plan Lands Firm in Trouble With Attorney General