Washington State Office of the Attorney General Bob Ferguson – April 25, 2013 T-MOBILE’S WIRELESS PLAN:

  • The Washington State Attorney General (the “Washington AG”) and T-Mobile USA, Inc. (“T-Mobile”) entered into a court-ordered agreement requiring the company to modify its allegedly deceptive advertisements for new wireless service plans.
  • T-Mobile’s latest plan offered “no restrictions,” “no annual contract,” and no obligation on behalf of the consumer to “serve a two year sentence.”
  • The AG’s office claimed that despite these claims, T-Mobile failed to communicate that there would be charges if a consumer decided to terminate his/her phone plan early.
  • T-Mobile’s new wireless plan does not include a phone. But consumers may purchase a phone by paying a monthly fee over a two-year period, or they may use their own phone, or pay the entire fee up front.
  • According to the Washington AG’s office, the company failed to disclose that customers who purchased a phone using the 24-month payment plan were required to stay with T-Mobile for the entire 24 months or face paying the full balance still owed on the phone for cancelling earlier.
  • Essentially, consumers would be required to pay an unexpected “balloon payment” for the phone equipment, which the Washington AG says could be higher than termination fees charged by other wireless carriers.

COURT-ORDERED AGREEMENT:

  • T-Mobile has cooperated with the Attorney General’s Office by signing an Assurance of Discontinuance (“AOD”), promising not to misrepresent consumers’ obligations under its contracts.
  • Under the terms of the agreement, T-Mobile is obligated to pay the Washington AG’s attorneys’ fees and costs, in the amount of $26,046.40.
  • The company must also disclose that customers who terminate their T-Mobile wireless service plans before they finish paying for the phone will have to pay the balance at the time of cancellation.
  • Pursuant to the terms of the AOD, T-Mobile has also agreed that it will:
    1. Not misrepresent customers’ true obligations under the terms of its contracts for the sale of service or equipment;
    2. Make clear the consequences associated with cancelling T-Mobile service plans, including restrictions or limitations on cancellation;
    3. More clearly state in all advertisements the true cost of telephone equipment, including the requirement that the customer carry a wireless service agreement for the life of the 24-month financing plan;
    4. Instruct representatives to fully disclose obligations under the terms of its contracts, including developing a “Frequently Asked Questions” page; and
    5. Train customer service representatives to comply with the terms of the settlement.

TAKE AWAY:

  • The Washington AG felt that a “critical component” of the new T-Mobile wireless service plan was omitted from its advertisements.
  • Consumers who purchased T-Mobile service and equipment between March 26 and April 25, 2013, are entitled to a full refund and may cancel their service plans without having to pay any outstanding balance for the phone, as long as certain terms of the service agreement are otherwise satisfied.