T-Mobile’s No-Contract Plans Carry Contract-Like Hidden Fees, AG Says

T-Mobile's No-Contract Plans Carry Contract-Like Hidden Fees, AG SaysT-Mobile recently became the first of the top four wireless carriers to boldly shift to no-contract plans, but Washington State Attorney General Bob Ferguson noticed something that many bloggers and consumer activists had already uncovered.

The no-contract arrangement actually has a contract-like feature.  It is true that you can get T-Mobile service that’s commitment-free as long as you bring your own device or pay in full for your device on the day that you take it home.

However, Ferguson said T-Mobile has failed to adequately disclose that customers who purchase a phone using the 24-month payment plan must carry a wireless service agreement with T-Mobile for the entire 24 months — or pay the full balance owed on phone if they cancel earlier.

That amounts to a hidden fee and deceptive advertising, the Washington AG said. T-Mobile USA is headquartered in Bellevue, Washington.

Ferguson said his AG’s Office filed a court order this week that was signed by T-Mobile and is effective nationwide.

He said it will ensure that T-Mobile “clearly communicates the limitations” of its new “no-contract” wireless service plans and allows customers “duped by the deceptive ads” to exit their contracts with no penalty.

Consumers who cancel their wireless 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 the typical two-year contract.

“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 adequately 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 cooperated with the Attorney General’s Office in signing an Assurance of Discontinuance (AOD) filed in King County Superior Court. Under the AOD, the company agrees not to:

  • Misrepresent consumers’ obligations under its contracts, including those contracts that have not restrictions or limitations;  and
  • Fail to adequately 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.

T-Mobile must contact consumers who purchased telephone equipment under the terms of their new business plan via e-mail to advise them of their rights.

Consumers eligible for this settlement may call T-Mobile at 1-877-746-0909 for more information or dial 611 from their T-Mobile telephones.

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