T-Mobile to alter no-contract plan ads after Wash. Attorney General describes them as misleading

Alex Wagner
Editorial Director of News and Content from  Omaha, NE
| April 25, 2013

T-Mobile CEO John Legere

T-Mobile has made quite a bit of noise with its new Simple Choice plans ever since it introduced them last month, but the way that T-Mo has advertised it's new offerings isn't sitting well with Washington state Attorney General Bob Ferguson. In a statement released today, Ferguson described T-Mobile's advertising as "deceptive," saying that he felt that T-Mobile failed to properly communicate some of the intricacies of the new plans.

Ferguson explained that while T-Mobile promotes its Simple Choice plans as having "no restrictions" and "no annual contract," an investigation found that T-Mobile didn't disclose that customers buying a new device with a 24-month payment plan must pay the full balance of the product before they're allowed to cancel their service. In some cases, Ferguson argued, this payment can be higher than the standard early termination fees of other carriers. "Instead of a 'two-year sentence' for wireless service, consumers face a different two-year 'sentence' to avoid a lump-sum balloon payment for the phone," Ferguson's office said in a statement.

In response to Ferguson's complaint, T-Mobile has signed an Assurance of Discontinuance (AOD) agreeing to properly disclose a customer's obligations with its contracts and to explain that subscribers must pay off their device in full before they're able to cancel service. T-Mobile has also agreed to more clearly state the true cost of its devices in its advertising, create a "Frequently Asked Questions" page explaining the obligations related to its contracts and to train customer service representatives on the details of this settlement within 21 days.

Ferguson also notes that any T-Mobile customers that purchased a new device and service between March 26 and April 25 can cancel their service without paying the balance remaining on their device and obtain a full refund for the amount that they have already paid for the equipment. Those customers that do cancel will need to return their device to T-Mobile.

While T-Mobile has said in the past that customers will need to make monthly payments on their hardware with its Simple Choice plans, apparently the big magenta carrier hasn't been explaining how its service termination process works with some customers. The fact that canceling customers need to pay off their remaining balance may seem fairly obvious to some, but it's probably wise for T-Mobile to lay that out more clearly in its advertising, which is something that it'll be required to do going forward.

Via CNET, Attorney General Bob Ferguson