T-Mobile has boasted about its new no-contract model of business over the past couple months. However, there is a certain contract-esque piece of the new business model that has gotten the company in trouble with the state Attorney General in Washington, according to the TechHive.com.
When the new business plan launched on March 26, T-Mobile began puffing out its chest and exclaiming why it was better than other cell phone carriers.
“Do you have any idea what you’re paying,” said the company’s chief executive John Legere. “I’m going to explain how stupid we all are because once it becomes flat and transparent, there’s nowhere to hide. You pay so much for your phones, it’s incredible.”
The company deemed itself the “uncarrier” and began offering plans without contracts. However, the issue was with the payment for the phone and not the plan. What is not advertised in all the T-Mobile commercials is the fact that a consumer must $20-per-month fee a consumer must pay after putting a down payment on the phone. The fee must be paid until the full price of the phone is reached.
According to Paula Sellis, an attorney from Attorney General’s Office, the fine-print that the company gave on the payment plan was not easy to understand.
"You had to dig very deeply to understand what the terms of the program were, and you had to put two and two together," Sellis said on a conference call on Thursday
“In our view those ads were quite deceptive,” said Attorney General Bob Ferguson.
T-Mobile released a statement Thursday, standing by its ads:
As America's Un-carrier, our goal is to increase transparency with our customers, unleashing them from restrictive long-term service contracts -- this kind of simple, straightforward approach is core to the new company we are building. While we believe our advertising was truthful and appropriate, we voluntarily agreed to this arrangement with the Washington AG in this spirit.
T-Mobile has agreed to pay $26,046.40 in costs and attorney fees. In addition, any person who signed up with T-Mobile will have the option of getting a full refund. Once a customer has been notified, they will have 30 days to obtain the refund.
According to Sellis, since T-Mobile USA is located in Bellvue, Washington the state Attorney Generel's Office can provide regulations for the company's business practices.
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