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.
“As Attorney General, my job is to defend consumers, ensure truth in advertising, and make sure all businesses are playing by the rules,” Ferguson said in a statement. “My office identified that T-Mobile was failing to disclose a critical component of their new plan to consumers, and we acted quickly to stop this practice and protect consumers across the country from harm.”
Under T-Mobile’s new setup, subscribers can purchase handsets by making a relatively small up-front payment and then paying the remaining cost of the phone over the following 24 months. For example, Apple’s iPhone 5 costs $99 down followed by 24 monthly payments of $20. While customers do not need to sign a standard contract committing them to T-Mobile’s wireless service for two years, they do have to sign an agreement taking responsibility for full equipment costs.
The Attorney General’s office confirmed that T-Mobile has signed an Assurance of Discontinuance in which it agreed to stop “misrepresenting that customers can obtain wireless service and telephone equipment without restrictions,” and it will no longer fail to “disclose that customers who terminate their T-Mobile wireless service before their device is paid off will have to pay the balance due on the phone at the time of cancellation.”
As part of the carrier’s agreement with the Attorney General, T-Mobile is offering all customers who purchased a handset between March 26th and April 25th a full refund, and they can also cancel their service plans without any penalties.