T-Mobile ordered to reveal true cost of canceling 'no-contract' wireless service

April 25, 2013 

— Washington State Attorney General Bob Ferguson has ordered T-Mobile to fix deceptive advertising that promised consumers no annual contracts while carrying hidden charges for early termination of phone plans.

The Attorney General's Office filed a court order Thursday signed by T-Mobile and effective nationwide that will ensure the company clearly communicates the limitations of its new “no-contract” wireless service plans.

It also allows customers to exit their contracts with no penalty, according to a news release.

“As Attorney General, my job is to defend consumers, ensure truth in advertising, and make sure all businesses are playing by the rules,” said Ferguson, in a news 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 recently started offering a new type of wireless service plan, claiming to offer “no restrictions,” “no annual contract” and no “two-year sentence.” But the plan doesn’t come with a phone. Customers can buy a phone at a monthly rate over a two-year term, use their own phone or buy a phone up front.

The company did not tell customers who purchase a phone using the 24-month payment plan that they must have a wireless service agreement with T-Mobile for the entire 24 months or pay the full balance owed on phone if they cancel earlier, according to the Attorney General’s Office. That amount could be higher than termination fees for other service providers.

Those who bought T-Mobile service and equipment between March 26 and April 25, 2013, can receive a full refund for their telephone equipment and cancel their service plans without paying the balance owed on their devices if the customer cancels service per the terms of the agreement.

The company will contact consumers who bought telephone equipment under the terms of their new business plan to advise them of their right to cancel and obtain a refund. Consumers also can call T-Mobile at 1-877-746-0909 or dial 611 from their T-Mobile telephones.

T-Mobile has also agreed to not misrepresent customers’ obligations under the terms of its contracts, make clear consequences of canceling service, more clearly state in all advertisements the cost of telephone equipment and the requirement to have a wireless service agreement for the life of the 24-month financing plan and train representatives to fully disclose contract obligations

T-Mobile also will pay attorneys’ fees and costs to the Attorney General’s Office in the amount of $26,046.40, according to a news release.

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