T-Mobile to change 'deceptive' no-contract advertising under settlement with Washington AG

T-Mobile USA agreed to a settlement with the Washington state attorney general to correct "alleged deceptive advertising that promised consumers no annual contracts while carrying hidden charges for early termination of phone plans." The settlement represents a black eye on T-Mobile's efforts to rebrand itself as the "uncarrier" that has consumers' best interests at heart.

T-Mobile last month launched a new campaign centered on its "uncarrier" positioning. As part of the effort, the carrier stopped offering subsidies on its phones. Instead, customers can purchase their wireless service and their phone separately. For example, qualifying T-Mobile customers can purchase the iPhone 5 for $99 upfront with the rest of the cost of the phone broken up into $20 payments over the next 24 months.

However, Washington State Attorney General Bob Ferguson said he investigated the carrier's advertising for the new plans and found the carrier was "failing to adequately disclose a critical component of their new plan." Specifically, Ferguson said T-Mobile did not adequately explain that customers must pay off the full cost of their phone before canceling their service with T-Mobile. Further, he said, in some cases the cost of paying off a phone through T-Mobile would exceed the cost of an early termination fee with another carrier.

"Instead of a 'two-year sentence' for wireless service, consumers face a different two-year 'sentence' to avoid a lump-sum balloon payment for the phone," Ferguson said in a press release.

Under the terms of the settlement between T-Mobile and the Washington Attorney General, the carrier agrees to:

  • Not misrepresent consumers' obligations under its contracts, including those contracts that have no restrictions or limitations; and
  • 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.

And, in Washington, anyone who purchased T-Mobile service between March 26 and April 25 can get a full refund for their equipment and cancel their service plans without being required to pay the remaining balance owed on their devices. T-Mobile also will pay $26,046.40 for attorneys' fees and other costs.

"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, straightforward approach is core to the new company we are building. While we believe our advertising was truthful and appropriate, we voluntarily agreed to this arrangement with the Washington AG in this spirit," T-Mobile said in a statement, according to IDG News Service.

T-Mobile is based in Bellevue, Wash.

For more:
- see this Washington AG release
- se this IDG article

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