The way T-Mobile USA is touting its shift away from wireless contracts has Washington state Attorney General Bob Ferguson seriously irked.
So much so, in fact, that Ferguson demanded that the carrier, which has its U.S. headquarters in Bellevue, fix its “deceptive advertising” campaign for the new “Uncarrier” plans, which promise no contracts and no commitment.
“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 the press release. “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.”
T-Mobile’s new Simple Choice Plan separates the cost of wireless service from the purchase of a phone — no longer subsidizing the cost of the device as part of the service plan. On the plan, customers can either pay for the phone upfront or via monthly payments.
However, Ferguson claims that T-Mobile failed to communicate to customers that there is some type of “commitment.” Indeed, T-Mobile users must pay the full balance on a phone in the case of early contract termination, which is stated in the fine-print of user agreements.
Ferguson said that customers who cancel their service face 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.”
A court order filed by Ferguson was signed today by T-Mobile, who has agreed to stop advertising the new plans as ones with no restrictions. The company also agreed to clearly disclose to customers that they’ll need to pay full price for their phone if they leave early.
Also, customers who entered into the new service plan between March 26 and April 25 will be offered full refund for devices and be allowed to cancel plans without paying the remaining balance.
T-Mobile rolled out its new plan at a big rebranding event in March, with CEO John Legere blasted T-Mobile’s wireless rivals for their billing methods.
It’s part of the company’s mission to change the way consumers think about wireless service, and shake up its own business in the process. T-Mobile outlined the new strategy earlier this year and explains in this FAQ:
“Just like all other wireless carriers, T-Mobile has to charge enough to cover the cost of the phone. The difference is that, with Value Plans, T-Mobile separates the cost of the phone from the cost of the service. That means T-Mobile Value Plan customers finish paying for their phone as soon the actual cost is paid off—and their monthly bill automatically drops.”
We’ve reached out to T-Mobile to find out more and will update the story when we hear back.
Previously on GeekWire: T-Mobile customers wait in line, swap Androids for iPhone 5