Washington AG Slams T-Mobile Over Deceptive 'No-Contract' Ads

zacharye writes "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 ..."

Comments

Re:exactly the same as Blockbuster

[mypalmike]

And how, exactly, is that not a standard cell service contract?

With a standard cell contract, your recurring charges stay the same indefinitely. You are billed as if your phone is subsidized even if it is not.

Re:exactly the same as Blockbuster

[todrules]

Maybe you're on your first phone contract or have simply never owned a phone out of contract, but I can say for absolute fact that you do not get any special treatment for owning your phone outright. The cost of the plan is a fixed amount, subsidized or not. If you bring your own phone you are only aiding the carrier hedge their bets by paying the same monthly rate as a contracted user but posing zero repayment risk.

That's true with Verizon, AT&T, and Sprint. But not T-Mobile. As soon as you pay for the phone, you're monthly bill goes down. Also, if you bring your own device, you get that dropped rate immediately.

Re:exactly the same as Blockbuster

[modecx]

I just read through it, and T-Mobile's deal is basically a 0% APR loan with a down payment and fixed $20/month payment, on top of your monthly service charge, for however long it takes to pay off the principal (depends on the price of the phone).

Any competent lender is going to provide you with a contract which spells out what happens when the loan ends, what happens if one or both parties terminate early, etc, and in T-Mobile's case, the loan is contingent on maintaining carrier service, and the remedy is full payment of the balance. Otherwise, people will just quit and get a $600 phone for the price of a $99 down payment.

Similarly, most new auto loans may be contingent on maintaining a service of some sort, like full coverage insurance. I think Washington State's AG has his head firmly implanted betwixt his butt cheeks, since any non-retard should easily tell the difference between the pay up front no-contract, month to month deal, and the other one which includes all kinds of disclosures as to the fact they're agreeing to a loan... But whatever.