Washington AG Slams T-Mobile Over Deceptive 'No-Contract' Ads

zacharye writes "Washington State Attorney General Bob Ferguson on Thursday ordered UNcarrier T-Mobile to correct 'deceptive advertising that promised consumers no annual contracts while carrying hidden charges for early termination of phone plans.' T-Mobile, which recently did away with standard cell phone service contracts and typical smartphone subsidies, is accused of misleading consumers by advertising no-contract wireless plans despite requiring that customers sign an agreement that makes them responsible for the full cost of their handsets should they cancel service prematurely ..."

Re:exactly the same as Blockbuster

[mypalmike]

And how, exactly, is that not a standard cell service contract?

With a standard cell contract, your recurring charges stay the same indefinitely. You are billed as if your phone is subsidized even if it is not.

Re:exactly the same as Blockbuster

[TooMuchToDo]

It's a loan, not a cell service contract.

You can cancel your service anytime, just pay up the rest of the principal on the 0% interest loan they're giving you.

Re:exactly the same as Blockbuster

[admdrew]

I suspect T-Mobile is financing your phone, and rolling it into the bill.

I haven't done this yet, but I did get as far as "checking out" online to see what it was like, and they pretty clearly display the $20 per month phone charge, as well as the initially-owed amount (ie, $99 for an HTC One). Online purchasing also gives you the option of paying for it entirely up front.

They made me sign a contract recently

[bobjr94]

I recently (after they came out with the no contract ads) added a 3rd line to my account (an older phone I owned outright) and I still had to sign a damn 2 year contract on that line, even though I provided my own hardware. And their ads didnt tell the truth either, they said add another phone to your account for only $5 a month. It was actually $15 a month, for $5 a month the new line did not include the use of any data or texting services, current on my plan. You had to pay extra to be able to use your data you already paid for. Another lie, unlimited 4G data, it says in the contracts unlimited upto your plans GB rating, then your speed is reduced to 2G data speeds.

no, they're complaining about the ads

[Chirs]

They're complaining that the advertising claims there is no contract, when in fact there is still a contract about the phone....just not the cell service.

All they have to do is update the advertising to make it clear that the money is still owing on the phone--which is just common sense in any case.

No you can't

[Anonymous Coward]

Try sprint. Even if out of contract and paying month to month, ANY change to your service and they FORCE you into a two year contract. Even if your phone is totally paid for. Terminate early and get an early termination fee.

Re:Stupid

[0racle]

Exactly, there are no early termination fees, there is pay for the hardware you haven't finished paying for yet.

Oh I'm sure that there are no shortage of people that 'didn't realize that' but T-Mobile shouldn't be on the hook for the stupidity of the public.

As a side note, I will probably be switching to T-Mobile this weekend. I am fully aware that if I decide switch to someone else next month, I will need to pay for the phone completely and not over the course of 2 years.

Re:exactly the same as Blockbuster

[Anonymous Coward]

Maybe you're on your first phone contract or have simply never owned a phone out of contract, but I can say for absolute fact that you do not get any special treatment for owning your phone outright. The cost of the plan is a fixed amount, subsidized or not. If you bring your own phone you are only aiding the carrier hedge their bets by paying the same monthly rate as a contracted user but posing zero repayment risk.

If you call and ask nice you can probably get in on an employee pricing plan for your company. Discounts of 20% or more are not uncommon and if you don't have one you're just subsidizing those that do, often times the very same people you're already subsidizing, the contract renewers.

Re:Stupid

[0racle]

Oh and BTW Washington AG, the pay for you phone fee is not hidden, they're very up front about it.

This isn't deceptive at all

[DavidinAla]

All T-Mobile has done is separate the cost of the phone from the cost of the service. You can quit using the service at any time, but you still have to finish paying for the hardware you've purchased. How is that deceptive?

Re:exactly the same as Blockbuster

[todrules]

Maybe you're on your first phone contract or have simply never owned a phone out of contract, but I can say for absolute fact that you do not get any special treatment for owning your phone outright. The cost of the plan is a fixed amount, subsidized or not. If you bring your own phone you are only aiding the carrier hedge their bets by paying the same monthly rate as a contracted user but posing zero repayment risk.

That's true with Verizon, AT&T, and Sprint. But not T-Mobile. As soon as you pay for the phone, you're monthly bill goes down. Also, if you bring your own device, you get that dropped rate immediately.

Re:exactly the same as Blockbuster

[mypalmike]

I'm not sure why you think you're correcting me - you said the same thing I did.

Me: "You are billed as if your phone is subsidized even if it is not."
You: "The cost of the plan is a fixed amount, subsidized or not."

Re:exactly the same as Blockbuster

[MondoGordo]

Are you being deliberately dim? You are paying for a new phone whether you get one or not because the plans offered cost the same whether or not you bring your own device. I can attest from personal experience with Sprint ... even if you bring your own device they still won't give you a new line without a 2 year service contract that costs exactly the same as it does if you get one of their "free" or "low cost" phones..

Re:exactly the same as Blockbuster

[ArhcAngel]

You can even sell your phone on ebay to try to recoup some of the costs if you don't want it anymore.

And for the tl;dr set T-Mobile will even buy the phone back [mytradeins.com] and credit that to what you owe.

Re:exactly the same as Blockbuster

[Dragonslicer]

Prior to T-Mobile's offering of no-contract plans - if you paid for your phone outright, or brought your own phone - you STILL had to sign up for a contract.

That's true, though it isn't the recent no-contract offering that started it. T-Mobile has been doing it for several years now. My plan has been $20/month cheaper than it otherwise would be ever since I brought my N900 to them three years ago.

Re:exactly the same as Blockbuster

[CanHasDIY]

yes, but not a plan contract....

Does T-Mobile make that distinction plainly in their advertisements?

If not, then it's deceptive. Period.

Re:exactly the same as Blockbuster

[modecx]

I just read through it, and T-Mobile's deal is basically a 0% APR loan with a down payment and fixed $20/month payment, on top of your monthly service charge, for however long it takes to pay off the principal (depends on the price of the phone).

Any competent lender is going to provide you with a contract which spells out what happens when the loan ends, what happens if one or both parties terminate early, etc, and in T-Mobile's case, the loan is contingent on maintaining carrier service, and the remedy is full payment of the balance. Otherwise, people will just quit and get a $600 phone for the price of a $99 down payment.

Similarly, most new auto loans may be contingent on maintaining a service of some sort, like full coverage insurance. I think Washington State's AG has his head firmly implanted betwixt his butt cheeks, since any non-retard should easily tell the difference between the pay up front no-contract, month to month deal, and the other one which includes all kinds of disclosures as to the fact they're agreeing to a loan... But whatever.

Re:Security updates

[mrchaotica]

If you buy a good phone it'll be supported by Cyanogenmod, so yes. Or if you buy a Google Nexus, yes (hopefully).