T-Mobile is looking to shake up the mobile marketplace as the uncarrier. It’s first challenge isn’t going to be customer adoption, but an overeager attorney general looking to challenge the carrier’s no-contract marketing. According to a report in the Seattle Times, Bob Ferguson, Attorney General for the state of Washington, filed a complaint against the carrier’s no-contract advertising claiming it was deceptive.
Ferguson argued that T-Mobile’s Simple Choice plan was much more complex than advertised and that the terms of the plan and its device payment options were not disclosed in the fine print. He released the following statement with his complaint along with a suggested resolution.
After an investigation of the company’s practices, the Attorney General’s Office learned that the company failed to disclose that customers who purchase a phone using the 24-month payment plan must carry a wireless service agreement with T-Mobile for the entire 24 months— or pay the full balance owed on phone if they cancel earlier.
Consumers who cancel their wireless service face an unanticipated balloon payment for the phone equipment – in most cases higher than termination fees for other wireless carriers depending on how early they cancel. 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.
T-Mobile, ironically represented by former Washington Attorney General Rob McKenna, disagreed with the claims, but still voluntarily submitted to the arrangement offered by Ferguson.
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, straight forward 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.
As part of its settlement, T-Mobile must also pay legal fees of $26,000. No consumers have complained about T-Mobile’s advertising, but if they do, they now have recourse to return their phones and cancel the payment plan without any additional fees