​T-Mobile ‘deceptive’ Practices In Cellphone Ads​​

By: | 04/27/2013 10:36 PM ET

T-Mobile is being asked to clarify its new non-contract plans, which allows a customer to leave at any time without an early termination fee as some might find it ‘deceptive’ without the full clarification.

T-Mobile 'deceptive'

State Attorney General Bob Ferguson on Thursday said that he has entered into a court-ordered agreement with the carrier after it found it ‘deceptive’ towards early termination.

In late March, T-Mobile dropped contracts, allowing customers to leave the carrier at any time without an early termination fee. But as is the case with most non-contract options in the wireless world, ditching a contract means ditching subsidized pricing for phones.

T-Mobile, for example, is selling the iPhone 5 for $99 down, plus payments of $20 per month for $24 months (or $579.99 total). According to Ferguson, T-Mobile did not adequately explain that customers must pay that full $579.99 before they can leave T-Mobile, which he said is deceptive advertising.

Ferguson said this amounts to an “unanticipated balloon payment for the phone equipment — in some cases higher than termination fees for other wireless carriers depending on how early they cancel.” This is really no different than the ETF faced by customers under contract, he argued.

“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 adequately 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 the deal, anyone who signed up for T-Mobile between March 26 and April 25 without fully understanding what that entailed can get a full refund for their phone and cancel the service, provided they return the handset. T-Mobile must contact customers to inform them of this option, the AG said.

Furthermore, T-Mobile has agreed not to misrepresent or be ‘deceptive’ what is expected of customers; make it clear that cancelling a plan means customers have to pay off their phones; and more clearly state how much a phone on T-Mobile will cost; post a FAQ page with this information; and train customer service reps to comply with this settlement within 21 days of its signing.