T-Mobile Calling Plans Run Afoul of Washington State's Attorney General

By Wayne Rash  |  Posted 2013-04-28 Print this article Print

Her office also released a statement that the "Attorney General's Office is charged with protecting consumers, ensuring truth in advertising and making sure all businesses are playing by the rules. Attorneys in our consumer protection division identified that T-Mobile was failing to disclose a critical component of its new plan in its advertising to consumers, and we acted quickly to work with T-Mobile to stop this practice."

T-Mobile, for its part, isn't arguing the point, preferring to get on with business. "Our goal is to increase transparency with our customers, unleashing them from restrictive long-term service contracts," according to a T-Mobile spokesperson responding in an email to eWEEK. "While we believe our advertising was truthful and appropriate, we voluntarily agreed to this arrangement with the Washington AG in this spirit."

However, Ferguson seems to have misunderstood the concept of what T-Mobile is actually doing. Here's how T-Mobile's plan works:

With T-Mobile, the wireless plan isn't tied to the phone. You can buy a phone from T-Mobile or not. If you have a compatible phone that's not locked, you can get a SIM from T-Mobile, put it into your phone, and you're ready to go.

If you want to buy a phone and use it on T-Mobile's network, you can. If you want an iPhone, for example, you can buy it from Apple, an Apple retailer or T-Mobile. If you buy it from Apple, as I did a few months ago, you'll pay $70 more than if you buy it from T-Mobile. T-Mobile, meanwhile, will also finance it if you pay $99 down and $20 a month for 24 months. The company is not charging you interest on the purchase or the financing. This is a very good deal.

What's happening is that T-Mobile is making you an interest-free loan as long as you're a T-Mobile customer. Once you've paid for the phone, you own it. If you've been paying for it monthly, then your costs drop by $20 per month.

Contrast this with the practice by the other major carriers. With them you'll pay $199 for the iPhone 5 you want. Then you'll pay approximately $30 per month more than T-Mobile for your monthly plan. Part of that monthly plan goes to pay for the phone, since Apple doesn't give these things away. But you'll keep paying the same amount long after the phone is paid for. In fact, you'll be paying that charge basically forever. Over the course of a two-year contract, that iPhone 5 can cost more than $1,000 over the cost of the same phone and the same service with T-Mobile.

So what's going on there? Ferguson wants T-Mobile to tell consumers that if they drop their T-Mobile service that they still have to pay for their phones. T-Mobile has been requiring that those phones be paid for in full, as is stated in the purchase contract. They're apparently not interested in giving interest-free loans to non-customers. But before T-Mobile offered its plan, you still had to pay for that phone up front. It just cost more with the other carriers.

Does any of this sound more deceptive than what's buried in the service agreements of any of the other mobile carriers?


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