T-Mobile has garnered a ton of attention as of late over the recent launch of their no-contract wireless plan. Of course, not all of that attention is desirable. One example of that is the attention of Washington state Attorney General Bob Ferguson, who recently called out T-Mobile over deceptive marketing tactics related to the contract-free plan.
Ferguson’s beef with T-Mobile has to do with their “no strings attached” claim. While it’s true that users aren’t locked into a contract and can leave any time they want, the AG said T-Mobile is failing to disclose the fact that consumers would be responsible for paying the entire balance of a smartphone all at once if they do leave (granted they opted for the monthly installment plan).
For example, let’s say a customer buys a new iPhone which retails for $650 without a contract. The customer would pay around $150 up front for the phone and make $20 payments on it each month until it is paid off. If that customer decided to leave T-Mobile after two months, they would still owe $460 for the phone – far more than they would be charged for an early service termination fee.
Ferguson described this as a surprise “balloon payment” which he believes T-Mobile isn’t doing a good enough job of outlining to customers.
In response, T-Mobile has agreed to stop advertising the plan as one with no restrictions. Furthermore, they will now disclose this facet of the plan to consumers before they sign up. Customers that purchased a phone and plan between March 26 and April 25 can elect to receive a full refund on the device and cancel their service plan without penalty if they wish.