T-Mobile’s ‘No Contract’ Ads Under Fire

by Christopher Freeburn | April 26, 2013 12:10 pm

T Mobile storefront 630 300x225 T Mobile's 'No Contract' Ads Under Fire[1]Bob Ferguson, Washington state’s attorney general, is calling out Deutsche Telekom‘s (PINK:DTEGY[2]) U.S. wireless carrier T-Mobile for misleading customers over its “un-carrier” plans[3].

T-Mobile is touting the “no contract” feature of the new plans, but Ferguson, says that T-Mobile customers who purchase a smartphone under the carrier’s 24-month repayment plan must maintain a service plan with the company for the balance of the period, or pay the outstanding price of the phone if they cancel service before the repayment period expires. He says those terms make the plans little different from early termination fees charged by other carriers, the Seattle Times noted.

In fact, Ferguson notes that the bill for the outstanding balance of purchased equipment can be higher than the early termination fees charged by rival carriers. He called T-Mobile’s “no contract” ads “quite deceptive” and filed an action in King County Superior Court to force the company to alter its advertising to highlight the charges.

While the charge was detailed in T-Mobile’s terms of service, they were not explained in the company’s advertising. The plans debuted in March[4].

T-Mobile released a statement indicating that it would comply with the Ferguson’s order. However it noted that it considered its advertising “truthful and appropriate” and did not concede any wrongdoing in its settlement with the AG’s office.

Customers who purchased equipment under the plans before April 25 can receive cancel their plans without incurring the charge.

In March, T-Mobile received clearance for its merger[5] with MetroPCS (NYSE:PCS[6]) from the Federal Communications Commission.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/09/T-Mobile-storefront-630.jpg
  2. DTEGY: http://studio-5.financialcontent.com/investplace/quote?Symbol=DTEGY
  3. misleading customers over its “un-carrier” plans: http://money.msn.com/now/post.aspx?post=fa8b5396-9d9b-4da0-9eb2-fe6135665371
  4. plans debuted in March: http://investorplace.com/2013/03/t-mobile-tries-to-shake-up-telecom/
  5. received clearance for its merger: http://investorplace.com/2013/03/metropcs-t-mobile-get-merger-approval-from-fcc/
  6. PCS: http://studio-5.financialcontent.com/investplace/quote?Symbol=PCS

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