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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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  • Car analogy (Score:5, Insightful)

    by michaelmalak (91262) <michael@michaelmalak.com> on Thursday April 25, 2013 @03:27PM (#43549441) Homepage
    Yeah, that car I just bought? I'd like to cancel that payment stuff and just keep the car.
    • Well in this case you'd have to continue paying for the car but it no longer can move.

    • by hedwards (940851)

      The point here is that nobody is claiming like they aren't giving you a contract with regards to the car. An auto loan is clearly a contract and most dealers don't advertise them anyways, they typically advertise the cars and their financing options.

      In this case, T-Mobile is advertising no contract plans that aren't actually no contract plans, which is why they're getting sued. I wasn't aware that they were doing this, but if they really were, then the advertisements are clearly misleading.

      • by rickb928 (945187)

        I'm a subscriber, and I don't see the deception. Somewhat inadequate disclosure, maybe, but I have no service contract. And I always understood that the phone was so much down, so much a month for so many months. And that was EXACTLY how it was explained.

        Now, I bought my new phone for $99 down, $51 tax (dead giveway that this is not so simple there!!!), shipping, and $2/month for 24 months. My phone will cost me about $636, tax & shipping included.

        And in 2 years, when I 've paid off the phone, or so

      • by admdrew (782761)

        T-Mobile is advertising no contract plans that aren't actually no contract plans

        They actually *are* no-contract plans, it's the phone that has a loan (contract). So while you're kinda functionally correct in your statement, legally you're not, which is why this likely will go away.

        Personally, I haven't seen them be deceptive about it when you actually go into the store or try to buy a phone online; they're very clearly 1) showing you your separate monthly cost of the phone and 2) showing how much left you o

      • There is no fixed term to your service, there is no penalty for terminating the service (you just pay back what you borrowed, no extra $100 "convenience" fee), and there's no automatic renewal. I haven't read all of the fine print, but if they're anything like my own cell phone company (which also has a no contract option), you can pay off the balance owing for the phone at any time, too.

        You're being pedantic and deliberately obtuse, when you know full well that they are not offering a term contract.

      • Legally every purchase you make is a contract. But in this context it's pretty clear what they mean by "no-contract": You can use the service without committing yourself to recurring payments.
        From their website it seems like they're separating the concepts of financing a new phone and using the service as much as they should need to and they let you pay up front if you want to do that. If you want a phone you have to pay for it. Anyone who thinks this is unfair is clearly delusional from years of absurd mar

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

      by Opportunist (166417) on Thursday April 25, 2013 @04:01PM (#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 mikeroySoft (1659329) on Thursday April 25, 2013 @03:27PM (#43549443)
    The "no-contract-contract", sold from within a sealed box.
    • Can I sign it (the Schrödinger's Contract) with quantum cryptography? Then no one, even myself, will know what I've signed or even whether I've signed it...
  • What an idiot (Score:5, Insightful)

    by geekoid (135745) <dadinportland AT yahoo DOT com> on Thursday April 25, 2013 @03:28PM (#43549449) Homepage Journal

    The contract is only if you don't pay for the phone upfront. Obviously if you are pating for it a month at a time they want you to finish paying before you leave.

    Right now, you can walk into a T Mobile store, plunk down cash and get a smartphone and not have a contract beyond a month to month agreement; which you can end without fees.

    I wonder if it was AT&T or Verizon the complained?

    • by MBGMorden (803437)

      Right now, you can walk into a T Mobile store, plunk down cash and get a smartphone and not have a contract beyond a month to month agreement; which you can end without fees.

      You can do that with just about any carrier. The only real difference is that T-Mobile cuts you a break on your per month price for not taking a subsidized phone. With Verizon, AT&T, or any other carrier you can sign up without a contract, its just that you'll be paying the same price as the guys who took the free/cheap phones.

      • No you can't (Score:2, Informative)

        by 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.

    • by hedwards (940851)

      The point is that this has been the case with all the carriers for quite some time. You could go month to month and not get the included phone. Now you don't get a rate break if you don't do it, but you don't have the early termination fee either.

      By advertising them as a no-contract network they were deceiving potential customers and putting themselves at a competitive advantage without actually having to do anything other than claim that they were doing something differently.

      • Does "no contracts" mean "You *can* get service without a contract" or does it mean "It is impossible to get stuck in any contract".

        It is pretty obvious that they mean the former. The only way to offer the latter is to remove the *option* to pay for your phone over 2 years and force every customer to pay for their phone up front.

        This is a better system because it gives customers more options.

        Also I'm fairly sure that they explain to people that they are signing a contract to pay for their phone when they

    • Obviously if you are paying for it a month at a time they want you to finish paying before you leave.

      Not. What is "obvious" to me is that if there truly wasn't a contract then canceling service would not impact the loan schedule on the phone. If you got a loan to pay for that phone from your local credit union instead of T-mobile, they wouldn't require immediate payment if you canceled service. That right there is proof that the loan is actually a contract for service.

      Meanwhile, if someone is in such financial straits that they have to cancel their phone service then having to immediately pay off the ba

  • But, you have the option of buying a phone off newegg or ebay and activating it on a plan with no contract or termination fee. Why WOULDN'T they charge you for the hardware if you haven't paid it off yet?

    • Re:Stupid (Score:4, Informative)

      by 0racle (667029) on Thursday April 25, 2013 @03:48PM (#43549703)
      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:Stupid (Score:4, Informative)

        by 0racle (667029) on Thursday April 25, 2013 @03:50PM (#43549729)
        Oh and BTW Washington AG, the pay for you phone fee is not hidden, they're very up front about it.
      • I don't mind the idea of an installment plan for a phone. I mind them threatening to make it due NOW if you dare to cancel your contract. People who can't pay the whole sum now (like, say, people who'd buy a phone for a few hundred on an installment plan) are FORCED into staying with them because they cannot afford to get out.

  • by rudy_wayne (414635) on Thursday April 25, 2013 @03:29PM (#43549469)

    I can't believe that cute girl would do such a thing.

  • It's like buying a carâ"you can buy it with or without a service contract for oil changes, but that doesn't mean you don't have to pay off the loan.
    • No, but opting to the "with oil" service and later changing your mind doesn't make your loan due in full the moment you decide to go to a different garage.

  • There is no annual contract for cell phone usage.

    There is an annual contract for the cell phone. Or you can pay for your phone on your cell phone with your credit card. Those don't have 'annual fees' (usually) but you still have to pay them off.

  • by 93 Escort Wagon (326346) on Thursday April 25, 2013 @03:31PM (#43549503)

    T-Mobile is offering consumers the ability to pay for the phone over time - at the same overall cost as if they paid up front - and my state's AG is complaining that they are requiring you still pay for the phone if you walk away from their phone service.

    My tax dollars at work, ladies and gentlemen. Since a recent past AG (Gregoire) became governor, I imagine this guy has political aspirations as well and is looking for resume padding he can offer up come election season.

    • by martas (1439879)
      Seriously, instead of going after some of the truly egregious scams consumers face these days (pharma advertising, hello??), he picked a completely reasonable advertisement claim that you'd have to be a complete moron to misunderstand. Way to be on the little guy's side, Bob Ferguson.
    • 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.

    • by Andrio (2580551)
      Yeah, exactly.

      T-Mobile, in effect, didn't change anything by starting this "No contract" campaign. Things still work the same. The key difference is after the two year subsidy is paid off, your phone bill goes down. This is in contrast to the other carriers, who keep charging the exact same even after the phone has been paid off.

      So really, this whole thing is just a way for T-Mobile to easily communicate that advantage to the customers, because most of them never think about their bill paying for the phone
    • by geek (5680) on Thursday April 25, 2013 @03:52PM (#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.

    • Unless I'm seriously mistaken here, it seems that the rest of the amount you owe for the phone is due instantly and in full the moment you cancel your contract. Which means that people who cannot afford to pay the whole sum right now (like, say, people who can't simply buy a phone but have to turn to options where you can pay it over time) are locked into their phone service provider contract because they cannot afford to get out of it. Sure, they could cancel it any time without cancellation fee, but at th

  • I don't see how they are being deceptive. There is no contract for their service. If you want to do financing for a phone through them, there is an agreement for that, but that is something entirely different and not required at all. I can go in there and get cell phone service and not sign a contract. I can even get cell phone coverage and buy a phone from them (outright) without a contract. But if I want to take advantage of their financing for phones, then of course I need to have some type of agreem

  • I guess the "no contracts" thing would be true if you could stop service and just paythe phone installment monthly charge, because you're not paying a service contract at all, rather you're buying a phone on time payments, and part and parcel with time payments is if you stop paying the time payments, you owe for the whole purchase price. IANAL, don't try this at home, etc etc

  • You mean to tell me that T-Mobile isn't selling smartphones for the low-low price of a single month of their cheapest plan?!!?!? THAT'S A RIDICULOUS ASSAULT ON MY RIGHTS AND INTERNET PRIVACY AND STUFF!!!

    Really? Who cares about this?

  • One that says much more about Bob Ferguson than it does T-Mobile.

  • 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 da
  • The "no contract" portion is for the pay-as-you go cellular phone service. The "contract" portion, which some people may choose to utilize is for paying for a telephone over time with multiple payments spread out over some months to years. That "contract" portion is not needed if you bring your own phone. Perhaps if T-Mobile were more explicit in their ads saying
    No contract if you bring your own phone to the game. Otherwise, still no contract for the monthly service, just a contract to buy the phone ov
  • by DavidinAla (639952) on Thursday April 25, 2013 @03:51PM (#43549751)
    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?
  • My understanding is that if you just buy phone service there's no early termination fees at all. That "early termination" fee only comes into play if you buy a handset at the same time and elect to pay for the handset in installments. In that case they'll include the installment payment for the handset on your bill each month as a separate charge, and if you terminate service you're responsible for paying off the balance of the contract for the handset. But that's hardly deceptive, I mean when was the last

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