T-Mobile USA gets slapped by Washington AG over deceptive “no-contract” ads

The “un-carrier” felt some heat from Washington State’s Attorney General Bob Ferguson as the state’s top lawyer ordered T-Mobile to correct “deceptive advertising that promised consumers no annual contracts while carrying hidden charges for early termination of phone plans.”

As many of us all now know, the nation’s fourth largest carrier did away with cellular service contracts and device subsidies, replacing them with no service contract and financed equipment plans.

Under the new “un-carrier” plans, customers purchase devices with a small down payment and paying the remaining cost over a financed period of time, typically 24 months. Customers are not tied to T-Mobile service per se, but they are committed to taking responsibility for all equipment costs. Subscribers that cancel service will be required to pay off the balance due on the device they are financing, which is akin to an early termination charge and depending on the equipment involved could be more expensive than an ETF ever was.

“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. “My office identified that T-Mobile was failing to 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 has signed an “Assurance of Discontinuance” which stated that the carrier would stop “misrepresenting that customers can obtain wireless service and telephone equipment without restrictions, [and] 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.”

Part of the agreement made with the Attorney General entails T-Mobile offering all customers who purchased a handset between March 26th and April 25th a full refund and the option to cancel service with no liability if they also agree to return their handset. While this was a state action, T-Mobile’s compliance will be nationwide so the carrier should be able to put this episode behind it and “un-carry on.”

source: Washington State Office of the Attorney General