Attorney General calls T-Mobile’s no-contract plans ‘deceptive’, carrier agrees to offer refunds and change advertising

Following the launch of T-Mobile’s new “Uncarrier” strategy alongside the $99 iPhone 5 and new no subsidy pricing plans last month, today the Washington State Attorney General has ordered T-Mobile to change its advertising calling its promise to offer no annual contracts “deceptive”.

The result of a court order filed by Attorney General Bob Ferguson and signed by T-Mobile will ensure the carrier’s commitment to changing advertising in order to properly outline “the limitations of its new no-contract” service plans. It will also allow “customers duped by the deceptive ads to exit their contracts with no penalty.”

“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. “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.”

More specifically, the Attorney General’s investigation found T-Mobile “failed to disclose that customers who purchase a phone using the 24-month payment plan” would be required to stay with T-Mobile’s plans for 24 months or pay the balance owed on the phone in order to cancel their service. T-Mobile has been working with the Attorney General’s Office to come to a solution and has now agreed to the following terms:

• Misrepresenting that customers can obtain wireless service and telephone equipment without restrictions;  and
• Failing 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.
• Not misrepresent customers’ true obligations under the terms of its contracts for the sale of service or equipment;
• Make clear the consequences of cancelling T-Mobile service, including restrictions or limitations on cancellation; fees and costs; and early termination fees;
• More clearly state in all advertisements the true cost of telephone equipment, including the requirement the customer carry a wireless service agreement for the life of the 24-month financing plan;
• Instruct representatives to fully disclose obligations under the terms of its contracts, including developing a “Frequently Asked Questions” page; and
• Train customer service representatives to comply with the settlement within 21 days of signing.

T-Mobile will be forced to provide full refunds and cancel service for customers that purchased hardware and a service plan through the carrier between March 26 and April 25th. It will also be responsible for picking up the court costs for the Attorney General’s Office related to the investigation.

The carrier will be contacting customers eligible for a refund or cancellation, but you can contact T-Mobile at 1-877-746-0909 or 611 on a T-Mobile phone for more info.