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

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

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34 Comments

1. techguy22

Posts: 227; Member since: Aug 09, 2012

my HTC one will be no contract. i will pay 575 for it. and it will be unlocked and bloatware free.. i will not deal with any carrier. T-Mobile plans isnt "no contract". i agree with the article.

6. donfem

Posts: 708; Member since: Mar 30, 2011

Very ignorant statement. You will agree to anything. I guess you don't understand the technicality involved in the AG's argument.

17. techguy22

Posts: 227; Member since: Aug 09, 2012

you dont get what i was trying to say. while everyone thinks Tmobile plan is awesome but its not. you are still gotta deal with the carrier. when you buy the "no contract" phone. not like when i get my HTC one from HTC site.

18. Gdrye

Posts: 111; Member since: Jan 02, 2012

even though i do work for a carrier, i wish companies would do more to sell right to the consumer, prices for plans will have no choice but to come down because there is a "choice" but with unified LTE chips and everyone going to Voip (VOLTE) this count be a future where we actually buy from the company that actually makes the phone, (look for carriers to start blocking universal LTE chipsets to keep their advantage, you heard it from me first)

2. bdavis022

Posts: 6; Member since: Mar 13, 2013

I think T-Mobile's plans are pretty self explanatory. Its still no contract, they don't make you sign anything. They advertised for a long time you could "bring your own device" and still not have to sign a contract but if you want a new phone, buy it full price or finance it. Its not rocket science. I think people only hear what they want to hear.

3. rallyguy

Posts: 620; Member since: Mar 13, 2012

I agree, there is no service contract. But it's obvious there is a phone contract, just like any loan you use to finance an item.

12. HDShatter

Posts: 1021; Member since: Jan 17, 2013

Yes but you can buy the phone full price/bring your own and be free of all contracts.

19. Gdrye

Posts: 111; Member since: Jan 02, 2012

umm. you can do that with basically any carrier. thats not a Tmobile thing

21. k1ng617

Posts: 270; Member since: Oct 13, 2009

Yes, but if you bring a phone to Verizon you still pay the same monthly payment as if you got a subsidized phone for as long as the contract lasts. If you bring one to T-Mob it's $20 less a month.

15. gwuhua1984

Posts: 1237; Member since: Mar 06, 2012

Yes, there is a phone contract, however, you're not forced to get a phone contract when you sign up.

24. papss unregistered

I think it's pretty obvious that it was misleading otherwise they wouldn't have changed it and offered a refund.

4. alouden unregistered

I am amazed at the inability of people to use common sense So were people thinking they could pay $99 for a phone and just walk away without paying the remaining $500? Does that even make sense? The terms of the plan were crystal clear from day one. Pay off the phone any way you see fit, and your monthly bill decreases. You leave the carrier and they ask for you to pay off the phone. How complicated is that? Anyone expecting NOT to pay for the rest of the phone if they cancelled service clearly is smoking something or is not very bright. Think about it: the carrier would be eating over $500 per person who decided to cancel right after starting service.

7. dok2005

Posts: 55; Member since: Apr 18, 2012

its more of if they leave early the amount owed can be more than the usual etf. which make more a service plan. lets say i get a phone from tmobile with there new un carry plans. i decide to leave a month later. now i owe them a whole bunch of money up front. instead of paying it every month. that make it no different from any service plan from another major carrier. honestly they make it sound hey walk away you want but you still owe us $20 a month for the phone but in reality its hey walk away but you owe us $500+. in retrospec its just a slightly more expensive verison of how sprint does their etf. sprint says hey your etf goes down every month. tmobile says hey you got to pay for your eip to go down every month.

20. Gdrye

Posts: 111; Member since: Jan 02, 2012

if you think about it, lets say you pay $200 for an iphone with at&t, and you just walk out on it, but you pay the $325 cancellation fee, you basically got a $650 phone for cheaper than the full price of the "uncarrier" plan

29. donfem

Posts: 708; Member since: Mar 30, 2011

Also, you forgot to mention the data plan you are forced to take at the price the carrier sets. Add all together for the 2 year contract, and you get the full price of the device plus a lot more.

5. Avicktim

Posts: 22; Member since: Apr 09, 2013

I already have the HTC One.. Come get it at TigerDirect for Att or Sprint!

8. Sniggly

Posts: 7305; Member since: Dec 05, 2009

Despite my natural aversion to all things government, I agree with this move. T-Mobile's whole "you're not under a 2 year contract but you really kind of are" thing IS a two year contract, just packaged differently.

10. Sniggly

Posts: 7305; Member since: Dec 05, 2009

You can downthumb me all you want, T-Mobile fanboys. You all know it's f**king true.

13. HDShatter

Posts: 1021; Member since: Jan 17, 2013

Thats only if you buy one of their phones, to be honest it would be better to just charge full price for everyone but then you have people who have been tricked by subsidized phones believe phones cost $200 not $600.

30. donfem

Posts: 708; Member since: Mar 30, 2011

How true is it if at inception you know you can pay off the remaining price of the device and walk away without a penalty? Strange to make ignorant statements as "true"

27. 9thWonderful

Posts: 232; Member since: Jan 24, 2013

I made the exact statement in the first PA article talking about T-Mobile's "no contract" plans. It's a shuffle game.

9. Gtrav

Posts: 13; Member since: Mar 31, 2013

Well it kinda is a contract because when I purchased my htc one I have 300 that i actually financed. I paid 279.99 plus tax; if i wanted to cancel tmo i would have to pay off the phone. Now i should be able to cancel tmo and just pay the financing company the $12.50 a month for 24 months

11. dok2005

Posts: 55; Member since: Apr 18, 2012

and thats what im talking about

14. HDShatter

Posts: 1021; Member since: Jan 17, 2013

Just pay full price for the phone, I have never owned a single smartphone for more than a year so I just get full price.

31. donfem

Posts: 708; Member since: Mar 30, 2011

Another untruth bandied as "truth" . First, you ae not involved with any "finance" company. Just T-Mo. Second, if you want to get out, you can pay up the balance and walk. Three, there is nowhere on the paperwork which states that, "you cannot pay off at anytime you want" or "have to wait for the remainder of the intsallment to get out"

16. YaBoiDre10

Posts: 84; Member since: Nov 15, 2012

Those "payment plans" are just another way for carriers to covertly make more money off their customers. I know im going to flinch when I see Verizons payment plan.

22. scsa852k

Posts: 331; Member since: Oct 16, 2012

Buying a phone of your choice unlocked and switching between carriers or MVNOs at your taste at low rate plan is the smartest way to go. T-Mo lets you do that and buy a phone with a payment plan. What's wrong with that? Signing a 2-year pact with no unlimited data and having to pay ridiculous subsidized bill protect consumers? Total BS. You get what you pay for and YOU! are responsible what you pay for. Stop putting the blame on carriers or dealers.

23. cjjohnson86

Posts: 29; Member since: Jan 05, 2012

I don't get it....if they cancel the service they should be reliable for the phones they put the down payments on.Do people think they just don't need to pay for the phones? There keeping the phone. Seems legit to me

25. jroc74

Posts: 6023; Member since: Dec 30, 2010

I agree with the AG. I was also under the impression that I didnt have to worry about ETF's. I would just have to keep paying on the phone until the balance was paid off. And soo many ppl hated on Verizon's similar plan....and raved on T Mo....lol. So far...this is from Verizon's website: "Do I continue to pay my payment monthly even if I cancel my service? Yes, if you voluntarily disconnect your wireless service, you’ll continue to be billed monthly until your balance is paid in full." Thats different than what T Mo is doing. No mention so far about ETF's. If their isnt.....I will gladly pay the finance charge and whatever extra on Verizon, my current carrier....

26. jroc74

Posts: 6023; Member since: Dec 30, 2010

I didnt mean ETF's...... I meant paying off the balance ASAP if you cancel service. So far with T Mo you have to, Verizon you dont.

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