T-Mobile US is coming under fire by a number of consumer groups for alleged unfair advertising. The crux of the matter is that T-Mobile US’ claims that customers can change carrier at any time is unfair because it fails to point out that customers must pay off any debt against hardware purchased from the carrier. The office of New York Attorney General Eric Schneiderman is said to be investigating complaints regarding these adverts and the source, USA TODAY newspaper, has learnt that a letter claiming T-Mobile practices “deceptive marketing and abusive debt collection practices” is on the way to the Consumer Financial Protection Bureau. It seems that T-Mobile’s “Uncarrier” way of working with customers has angered consumer organization Change to Win, who cite that over 90% of T-Mobile’s customers are locked into a two year loan for cellular devices – which they claim flies in the face of T-Mobile’s Uncarrier claims that customers are not locked into two year deals with hidden fees. If customers end their finance agreement before the two years is up, they may end up owing more than if they were to break a traditional contract and if they do not pay in time, are swiftly placed with a debt collection agency. Nell Geiser, a research director for Change to Win, said this on the matter: “We ask T-Mobile to reform its own practices by no longer using the misleading language around no contracts… we ask that it stop claiming that it pays customers’ early termination fees.” Change to Win has said that it has concerns over similar practices but is concentrating its complaint on T-Mobile because they have led the change to industry.
One of the issues covered in the complaint is how customers do not understand what they are signing up into: T-Mobile US’ “equipment installation plans” are simply a way of spreading the cost of a device over two years, so whilst the consumer is not tied into the carrier, he or she is tied into paying for the device. This practice has swiftly become common across the industry, but Color of Change (an online advocacy group) claims that this way of doing business unfairly targets people of color and tends to hurt customers on a low income and minority communities: “They tell customers one thing and they give them something completely different.”
T-Mobile’s spokeswoman, Annie Garrigan, did not comment on the letter, nor did a spokesperson for the New York Attorney General, but John Legere, T-Mobile’s often outspoken Chief Executive, took to Twitter to say: “We haven’t been accused of false advertising by any regulatory body.” Later on he responded to a Twitter comment with, “Ridicious headline to sensationalize un-seen claims! Makes me think you were suckered? OR you in someone’s back pocket?” Whilst John’s colorful response certainly makes a valid point, given the number of consumer groups signing the letter, we are sure T-Mobile US will put together a more comprehensive response. T-Mobile US have enjoyed the last three years since John Legere took over in 2012. America’s fourth largest national carrier has recently moved to become the third largest carrier, overtaking Sprint. Furthermore, this week Consumer Reports readers ranked T-Mobile as the best wireless carrier in the US.