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Washington AG Slams T-Mobile Over Deceptive 'No-Contract' Ads 371

Posted by timothy
from the what-we-meant-was dept.
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 ..."
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Washington AG Slams T-Mobile Over Deceptive 'No-Contract' Ads

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  • by dgatwood (11270) on Thursday April 25, 2013 @04:49PM (#43549719) Journal

    What I don't get is why T-Mobile doesn't let you continue paying off the phone on a month-by-month basis after you cancel service. That's the part that's potentially deceptive. One would naturally expect that "no contract service" means that your loan on the phone is not tied to that nonexistent contract. The fact that your phone loan is tied to service means that, in fact, it is a service contract, no matter how T-Mobile tries to spin it.

  • by geek (5680) on Thursday April 25, 2013 @04:52PM (#43549761) Homepage

    Mark my words, AT&T and/or Verizon put this AG up to it. We can't have that pesky competition stuff going on.

  • Re:Car analogy (Score:5, Interesting)

    by Opportunist (166417) on Thursday April 25, 2013 @05:01PM (#43549867)

    Tiny difference. It's more like the dealer where you have that monthly plan going also has a fuel station and you'd have to use his fuel station for your fuel needs or the rest of the amount you owe is due tomorrow.

  • by LordVader717 (888547) on Thursday April 25, 2013 @05:25PM (#43550105)

    The advertising just says there is no annual service contract, and that you can use your existing phone. If they were advertising a new phone for free with no future payments there might be a problem, but they didn't do that.

  • by h4rr4r (612664) on Thursday April 25, 2013 @05:27PM (#43550133)

    This.

    It is a loan, cancel service and the loan comes due.

    What they should do is let you cancel service and still finance out the phone. That way there is no room for anyone to complain.

  • by Anonymous Coward on Thursday April 25, 2013 @05:34PM (#43550201)

    I thought the same, and it's easy to miss, but buried in the article:

    The problem is this:

    If you cancel your service plan, the balance on your phone loan becomes due in full, immediately. You don't get to keep making the $20/mo payments on the phone.

  • by Swarley (1795754) on Thursday April 25, 2013 @05:35PM (#43550205)

    This is nonsense. Try doing exactly what you said with Verizon. They won't let arbitrary compatible devices on their network. Call them up to activate and they'll tell you to bring the device to a Verizon store so they can "assess it for compatibility" which just means figure out if you bought it from them or not. If not it magically becomes "incompatible".

  • by Obfuscant (592200) on Thursday April 25, 2013 @06:00PM (#43550469)

    It costs tMobile money to make no interest loans.

    That's not the reason. The reason is simple: if you cancel service there is no longer any reasonable collateral for the loan on the phone. It is not reasonable for them to have to send someone out to your home to repossess a cell phone. It is very simple for them to turn your service off until you pay your loan. That will be enough stick for most people.

    If you've already turned your service off, they have no stick to enforce the loan.

    As for this being a contract, it is NOT an annual contract, it is not a contract for phone service. It is a LOAN contract, which you can either accept or not when you get service. You don't have to keep the phone service, and there is no early termination fee for cancelling. YOU have agreed to pay off the phone loan if you cancel your phone service, but you don't have to take a loan to start with, and it seems quite logical and common sense that if you get a phone from someone that you have to pay them for it.

  • by mspohr (589790) on Thursday April 25, 2013 @07:37PM (#43551149)

    Many consumer product installment payment contracts have similar accelerated payment clauses which can be triggered by loss or damage to the product, changes in borrowers financial status (miss a payment and it all comes due, for example), etc.
    This is a product installment payment contract for a phone you are buying. It is not a cell phone service contract.

  • by mrchaotica (681592) * on Thursday April 25, 2013 @07:42PM (#43551191)

    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.

    You can't drop the T-Mobile service and just keep paying off the phone in $20 installments? I would have assumed you could... and I guess that must be what the AG is upset about.

  • by AlphaWolf_HK (692722) on Thursday April 25, 2013 @08:07PM (#43551365)

    You're missing the point. Take my case: before switching to T-Mobile, I bought five nexus 4 phones at about 300 a pop. T-Mobile let's me put then on their service for $110 a month for all five lines fully unlimited, and no need for a contract. That's dirt cheap. At&t not so much. At&t I bring my nexus phones over, I still pay as if they subsidized it, which is upwards of $250 a month, AND a have to agree to a two year term. This is where T-Mobile wins, and they shine too.

    Thus AG who is complaining about T-Mobile is either a moron or a shill. The later wouldn't surprise me because many politicians are known for granting favors to larger communications providers, and I'll bet that if you look into his campaign finances, there's probably a sprint, Verizon, or at&t line item in it.

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