Device financing terms to be clarified going forward; some customers can leave without penalty
T-Mobile has been making some big steps towards what it calls an "UNcarrier" strategy, which clarifies device pricing, ends phone contracts and gives customers more choice in the wireless industry. In trying to reinvent its strategy, however, T-Mobile has apparently ruffled some feathers at the Washington State Attorney General's office. Attorney General Bob Ferguson claims that T-Mobile's new plan structure is deceptive, leaves unfulfilled promises, and has "duped" consumers.
Ferguson specifically takes issue with the way T-Mobile now finances devices -- with a small down payment and monthly installments -- claiming that although the carrier claims there is no commitment to the service, customers will have to stay for 24 months or "face an unanticipated balloon payment for the phone equipment". Specifically, the AG had this to say:
“My office identified that T-Mobile was failing to disclose a critical component of their new plan to consumers, and we acted quickly to stop this practice and protect consumers across the country from harm.”
Ferguson has filed a court order, which has been signed and agreed upon by T-Mobile, that will force the carrier to clarify its terms of service and stop what Ferguson calls "deceptive advertising". Under the terms of the order, T-Mobile has created a document called the "an Assurance of Discontinuance (AOD)", better laying out the terms of the new Simple Choice plans. Inside, the carrier agrees not to:
- Misrepresent consumers' obligations under its contracts, including those contracts that have not restrictions or limitations; and
- Fail to adequately disclose that customers who terminate their T-Mobile wireless service before their device is paid off will have to pay the balance due on the phone at the time of cancelation.
As part of the settlement, anyone who purchased service from T-mobile from March 26 to April 25 will be given an opportunity to leave the service agreement, with no penalty, and receive a full refund for the device and service provided they cite the terms of the new AOD.
Source: TmoNews; WA Attorney General
Reader comments
T-Mobile quickly gives in to WA Attorney General, agrees 'UNcarrier' is misleading to consumers
Putting my two cents in here...In CA T-Mobile has been running an ad on the radio that is clearly deceptive. it states that you can get a Galaxy 4s for $149.99 vs paying 199.99 at att... They say upfront cost...at the end of the commercial it goes into the $20 a month stuff. but for those who dont think, your essentially paying 629.99 for a phone.......yes 629.99 that s deceptive advertising...I'd rather go to att and pay the 199.99 and have it under a contract, you get better service with a contract anyway
I just returned two phones that were purchased between those dates, what are the chances I can get both my "re-stocking" fees reimbursed?
It sure would be nice if the AG would make Verizon explain why we pay a never ending subsidy payment even after our contract is up for a phone that we supposedly paid off over the last 24 months? ANYONE?
I hope they go after automobile financing and home mortgages next. A $500 smart phone is chump change compared to a $20,000 car or $250,000 home.
This D.A. really isn't that bright. "How dare they not give you free hardware?"
Hey, dip: All the other guys make you pay for the phone, too. You just never pay off the phone.
This is a non issue. There is no case here. Customers should know common sense, if they are too stupid...ask, if you don't ask or read the contract you fail. It is your fault. Tired of government nitpicking in private business and citizens dealings. The unknowing don't need protection they need the gift of reasoning and ability to deduce a basic understanding of purchasing products. No place for government here.
The fact t-mobile caved so easily should tell you something. Also how do you even know t-mobile employees even explained it to them correctly?
That T-Mobile agreed so easily tells me a couple things. 1. They hadn't realized just how stupid customers are (which is very). 2. There's no way you can fight a state attorney general and win. Even if you win the case, you look bad for being in the situation in the first place and it gets smeared out for months. Better to wrap it up and get it over with. As it is, this costs T-Mobile pretty much no money.
It is not the same as a 2 year contract. You have complete control over when you leave. The fact that it is interest free is the reason they charge you the full remaining cost of the phone when you leave. Service has no commitment and the phone doesn't either depending on when YOU choose to pay it off. It only last the 24 months if YOU want it to. Agreed that it is wrong if this isn't being laid out for lames to grasp but eh just let's you know people will only be happy when service is 20 or less a month and high end tech is sold for $50 full price.
I've been on T-Mobile for a long time. I've been taking advantage of contract-free value plans for several years now. I've financed and paid off a Blackberry Curve and more recently a GS2. I'm currently running a Nexus 4 I bought outright so I'm no longer making payments. My first thought when reading this was that this is dumb. Financing a phone is not the same as a contract. However, the part that surprised me was the fact that you'd have to pay off your phone immediately if you drop your service. I had never thought of that contingency. I guess it makes sense but this should be spelled out clearly in their marketing even as I acknowledge that the language of the AG, my AG by the way as I'm currently about two miles from T-Mobile US headquarters, is a little bombastic.
If the phone hardware contract was in fact a separate contract as T-Mo had promised, then you could go to a different carrier and continue to make payments for only the hardware.
But T-Mo lied, and that is not how it works in practice. The AG was right to bitchslap them. If they want to claim its a separate contract they should treat it that way, and continue to bill your credit card for hardware installments even when you move to another carrier.
It's not a contract as people think of contracts. It's a free loan that's tied to you being their customer. They lied about nothing. They just weren't as clear as they should have been.
What T-Mobile should do is charge financing for the loan. That way, if people get their phone and then take off for another carrier they will still be making some money.
Most of the confusion came from the stupid blogs flashing the down payment price in the headline and then barely even mentioning the 24 payments in the text. NOT t mobiles fault imho.
confusion? Anybody that has a problem with this is clearly just trying to scam system and get a phone for virtually no money. If you're too stupid to understand this you should not on a cell phone in the first place.the fact that they advertise a down payment, anybody with a brain should understand that it means you have to finance the rest of the price of the phone Over a certain amount of time
I hope attorney general is an elected position in Washington State because this guy sounds like an idiot. How can you call the phone pricing "financing" when you pay exactly the same price if you pay up-front on day one, or put $199 down and pay the rest off over 20 months? No finance fees involved, one of the best deals you're going to get anywhere to pay over time. This clown is just trying to make a name for himself or is being paid off by one of the other carriers (unless there's something in the water there that just makes everyone stupid).
0% financing is still financing. Ever heard of an interest-free loan? It's the same thing.
I understand better after all these posts what the difference is. But you are still tied to the carrier (phone) , regardless, because of the cheaper up front cost on the phone and the balance paid out over ***gasp*** two years, feels the same to me.
The solution to me is to bring the up front cost of phones down and mirror the landline industry where you just hook up the phone you have if you want. Yes, yes, I know there is talk about allowing you to bring your own phone but not all carrier participate fully or easily.
Disclaimer: I am on Sprint, so the whole SIM thing is like magic......;)
It took this to clarify for you? So you really thought you could get a $700 device for $70 down, cancel your service after a month, and not pay nothing more for the phone? Lol
Don't be ridiculous. That is not what is going on here. People weren't trying to walk away after paying only 70 bucks.
They were perfectly willing to make payments till the phone was paid off.
On a free loan. Seriously, shut up.
And how do you know that? Do you have all of these customers on speed dial or something?
Oh any anyone that needs to be clarified on this should not even own a cell phone.
This is like saying I financed a TV through Best Buy, got my cable service then 2 months later cancelled my service so I don't have to pay for the TV I bought anymore.
Enough with these freeloaders, pay your way or don't get a phone
So in other words, t mobile needs to clarify this for customers that are too stupid to realize that the cost of the phone and service are separated??? You can cancel your service at any time but are people so stupid to think you can buy a $700 device, cancel your service and you can keep the handset for free?
This does not need any clarification, you just need to have customers that stop trying to get everything for free and handed out to them...... Obama
Ah. Obama Tourette Syndrome...It's not just a plague of right-wing blogs.
We really need a new Godwin's law to describe the penchant for blaming Obama for all things negative.
Not blaming Obama in full, blaming the culture he is building of freeloading and people looking for handouts. Anyone that does not understand the TMo plan for financing is either stupid or is trying to find a loophole out of paying for a product they purchased.
Actually, this has nothing to do with a "culture of freeloading" and everything to do with stupidity and lack of education....something that the Republican party has had everything with promoting. Don't make a tech blog a home for your misguided political beliefs.
where? what handouts? I haven't got one thing from Obama. if your talking about the "Obama phone" Bush started that the right wing brainwashed you into thinking it was Obama and you only get 70-200 minutes of talk time(no nights and weekends), basically for emergency calls no text or data unless that's new.
Right, it's Obama's fault that people are cheap a-holes.
Maybe if the republicans didn't keep cutting funding to education we wouldn't have so many spectacularly stupid people in this country. Idiot.
You've got it Exactly Backward.
People understood completely that it was two separate costs, one for service, one for the phone.
When they found out that the service sucked, the decided to cancel the service while still paying on the phone, and take the phone to a different carrier.
But T-Mo wouldn't let them continue to make payments on the phone. They demanded it all be paid off immediately, which is NOT what they advertised.
Nobody intended to keep the 700 dollar device for free. They wanted to continue to make payments.
Its not that hard to understand.
They wanted a free loan. Why should T-Mobile have to give you a free loan on a device when they won't be getting your patronage for their services?
T-Mobile has disclosed these terms, but just in the fine print. They will now be required to be more upfront as they should be.
Its not a free loan. Stop posting that nonsense.
The phones are sold at full retail, even though T-Mo paid a very deeply cut wholesale rate for them by buying in bulk. You don't need to charge interest with a > 100% markup.
The fact T-Mo caved instantly when the AG called them should make it clear to you they know that they stepped over the line.
icebike, I feel for you man. I totally get your point but no one seems to want to listen. Everyone is acting like T-mobile is being picked on. It amazes me that an AG actually did their job and people are complaining. Obviously the Washington AG office recieved consumer complaints on the subject, investigated and came up with a course of action to address those complaints. T-mobile considered it, realized that being more clear is the right thing, and fixed it. Wow...the legal system worked right and the only response on this page is people claimimg corruption, and stupidity. You are exactly right, T-mobile needed to clarify that the balance of the phone is due on termination. Simple statement, but it needs to be there. It has nothing to do with the consumer being stupid and everything to do with clarity. What T-mobile is doing now is brand new in the phone carrier world, they need to be as specific as possible.
A zero interest, no fee loan on a discounted device IS a FREE LOAN. The iPhone 5 16gb sells for $650 on Apple.com. T-Mobile sells it for $580, $70 less. That is NOT full retail.
You're 100% wrong. Period.
Too many people post comments that are opinion, or their own ambitious ideas, and present them as fact with no research whatsoever to back up their claims. You said Tmobile paid a very deeply cut wholesale rate for them buying in bulk, followed by : you don't need to charge interest with a 100% markup. I would be willing to bet that you have no idea how t-mobile paid for their phones, how much they paid for them, or if the purchase order was even a wholesale rate, or a different rate altogether. Then, hilariously, you preceded the dumb statement of t-mo caved instantly with "the fact" when I would actually bet my life that you weren't in the room when the AG called T-mobile. Do you really think the Attorney General picked up the phone and dialed the CEO of T-mobile and said "look buddy, you're misleading the customers and I'm going to nail your ass" Then CEO says INSTANTLY "Awwww shucks, you got me" It just sounds ridiculous, so stop scolding other people about posting nonsense, when you're posting plenty of your own.
The one thing that fails to be pointed out is that you get literal Unlimited everything for $70/month, which saves you $960 compared to comparable plans on AT&T and Verizon. So, you pay $100-$200 for the phone, plus $480 -- saving $380-$480 over the term ... and that's just if you get the most expensive plan.
You can also pay off your phone and get a new subsidy whenever you want. With sites like Swappa, just sell your phone in a year and use the money to pay it off, then drop another $100-$200 on whatever is out then.
It's not deceptive. It really is a better way of doing things and it is more transparent than the two-year contracts of old.
I sound like I work for T-Mobile. I'm just a massive nerd who went through the process of crunching those numbers when I switched Tmo plans.
This is a lot of BS. I bet this Attorney General has been receiving some sort of contributions from ATT and Verizon for this ridiculous claim. T-Mobile is the most transparent when it comes to mobile plans. You buy a phone outright or get it financed for 24 months interest free. There are no penalties for early pay off. Their plans are as cheep as it gets and are not tied up whether you own your phone or finance them through T-Mobile. Now it is different story that I calculated that it would cost actually more for my family to switch from ATT to T-Mobile simply because ATT let's you get new device every 18 months, but who knows how long that will last. As soon as they change it to 24 months like Verizon did, I am moving to T-Mobile.
Very simply worded!
Let's hear from some T-Mobile employees,
are there any customers having difficulty understanding
the device payment plan?
Exactly! One quibble though: Phoenix doesn't set a specific upgrade time for all customers since it evaluates a number of account items, but for 90% of customers the upgrade eligibility resets every 20 months, not 18.
I thought their model was easy enough to understand, but after reading comments and some articles, I guess it's not. Perhaps T-Mo would be better off encouraging people to bring their own phone, and only advertising their cheaper plans.
Then, perhaps let the financing be handled by a separate party, so that if someone cancels, he can still pay off the phone in installments.
I think their current model is great since financing is 0%, but combining the service plan and financing and trying to explain how it works might be too difficult for most to grasp.
It IS that easy to understand, you're just underestimating how stupid some people are and how obstinate and pig-headed folks can get when they're trying to get a deal. It's an easy thing to do, assuming that people aren't stupid or buttholes.
Consumers sure are stupid!!!
Essentially it's a lay-a-way plan, how hard is it to understand???
I don't work in the wireless industry, I understand this just fine.
If I desire to get the S5 this time next year,
I will very required to pay off the remaining balance on
the S4, plus down payment on the S5, not hard stuff to understand .
To me, it's all about device freedom, and I believe T-Mobile understands the avg consumer. People want freedom, while at the same time most people don't have the whopping $600 plus in cash just laying around .
I like that T-Mobile understands the avg consumer.
Ha. You kinda said what I wanted, but alot harsher.
its not like lay-a-way. if it was you wouldn't get the phone till you paid it off. but either way if you are doing the 24month payment plan and make the normal payments and you want to cancel you have to pay a fee. if its at any other carrier you pay the ETF and you get to walk away with the phone. if its at tmobile you pay off the rest of the phone and you walk away with the phone. the good difference with tmobile is when you pay off the phone your monthly payments go down to the low plan price.
How confusing is this? You're basically putting a phone on layaway for two years. If you stop making your payments, you're going owe them the rest of the money.
I don't think layaway is a good example. If you wanna cancel a layaway, you only have to pay a tiny fee depending on the store.
I don't really get how people are so dumb that they can't comprehend the concept of contracts vs monthly phone payments because you bought a phone you couldn't pay full price for. I'm as proud as the next patriot, but our country is getting dumber and dumber every year to the point where an AG thinks he must "march in to save the day from this deception"!
Yup...It's like when i buy a car. I'm not locked in to that car company for 4 years just because I have a loan through them. I can always trade in the car or buy it outright and move on.
And it's not as if I can just cancel my contract and walk away with the car after a month or two. Apparently some dumbasses in Washington thought they were slick and found a loophole to buy a $600 phone for $100. Again, dumbasses.
No, that's not it at all. There is no car analogy here. Don't call other people dumbasses while trying to fit everything into a car analogy.
The contract is sold as a separate contract, but in reality it was tied to the service contract.
You make payments to T-Mo towards two different contracts, service, and hardware.
Nobody was trying to walk away with a unpaid phone. They were trying to take the phone to a different carrier, and still make payments against the phone hardware contract.
Contracts for a product are tied to service all the time. Most car financing, for example, ties your financing to your concurrent purchase of insurance. If you don't pay for insurance they have the option to buy insurance and charge you for it, or revoke your financing and make you pay for the remaining principal. This is no different. T-Mobile isn't about to get into monthly collections on folk's phones after they cancel service, and the financing of the phone is conditional on the service. If you want to walk away, fine: pay for the rest of your phone. It's clear in the financing agreement, so some folks just can't read...which makes them dumbasses.
This really is very, very simple. If you don't get it, then yes, you're a bit of an idiot. You can't walk in and get no-interest financing on a discounted phone without signing a service contract. It's that simple. To expect T-Mobile to continue to give you no-interest financing on a discounted phone after you walk away from your service contract is sheer lunacy. Why would, or should, a company do that? T-Mobile isn't a discount electronics seller, they're a mobile service provider, they sell phones just to attract users to their real business.
Can we sue Verizon for being greedy bastards?
No, because they never claimed they weren't.
I just changed my plan last week with tmo, I wonder if I gall under that umbrella
Because, really...how is this different from having a contract? You still DO have a contract...on the PHONE not the SERVICE.
Yeah... that's not quite true, though. If you cancel the service, or even change service to an unapproved plan, T-Mobile revokes the Equipment Installment Plan contract and demands immediate payment of the whole unpaid balance! So, in effect, the contract is ALSO tied to the service plan.
Well, that makes sense. Phones on contract are basically rent to own. Pay a percentage up front, say $200 on a $600 device, and then agree to pay whatever plan you've chosen for two years and the $400 difference is built into all tiers of all plans. The whole thing's a big scam anyway. Does it really cost 99 cents to provide a minute of call time? No. If it did then home telephone service wouldn't be so cheap. I just want to go out and buy a phone and connect it to service and pay a fee, just like my home phone. I don't know why we *must* have contracts at all. Well, actually I do, but it's tied into politics and capitalism and consumerism and it all stinks.
That's exactly what you can do with T-Mobile. No one is saying you have to use their 0% APR device loan .
I'm on VZW, when my Droid 1 contract was up, I waited 3 months to see all the new phones come out, Razr, rezound, Gnex. All 3 months off contract I still paid the same amount as if I was on a subsidized plan, my bill never lowered at all till I got the Gnex 3 months later.
Exactly the same as it use to be.
This bullet from the story (pushed to last, but really it is the meat of the issue):
"Fail to adequately disclose that customers who terminate their T-Mobile wireless service before their device is paid off will have to pay the balance due on the phone at the time of cancellation."
T-Mo made big noise and great promises, but in the end, nothing changed at all, other than when the phone was paid off, your total bill went down to just the cost of service.
You still couldn't walk away with your phone even if you continued to make payments on that separate contract.
Things would be better for everyone if they FTC just made it illegal for carriers to sell phones under any conditions. You don't buy your TV set from Comcast or Dish, so why buy your phone from a Carrier?
It has changed. You can walk away from the carrier without paying an ETF. They finance the phone for free to ease the pain of the upfront phone costs. Americans aren't used to buying phones outright. They likely don't make any money on the phone at all. You are free to bring your own phone, as I have, and you have no obligations at all to T-Mobile.
^^^This. Only an idiot wouldn't understand T-Mobile's plans. If you want their service you have three options:
1) BYOD. If you do this you simply pay the cost of service without having phone subsidization hiking up the plan cost. If you want to cancel, fine. No ETF.
2) Buy a phone at full price. If you do this you pay the cost of the phone from T-Mobile, which is likely less than what you would pay on the open market due to T-Mobile's buying power. You will simply pay the cost of service. If you cancel, again there is no ETF.
3) Buy a phone and finance it. Pay a small amount down and finance the rest at no interest over 24 months. If you cancel, since the financing is conditional on you continuing service, you have to pay the remaining balance due for your phone. There is no ETF.
All 3 of these options are better for the consumer than anything offered by any major carrier in the US.
Actually, that's inaccurate. You pay off the phone early, in 4 months for example, the phone is yours and no other agreement exists. You're free to do whatever you want once the at phone is paid off.
On the other hand sign a two year agreement with Verizon and decide to pay off the phone 4 months later, that contract goes nowhere, and even when the 24 months has ended, the monthly payments do not reduce from the eliminated subsidy. Not the same at all and I'm not sure why people would think they could leave the carrier without having to pay for the rest of the device if the balance is still outstanding. This really is not news. Maybe they neglected to clarify, but not news.
That is exactly what I'm thinking here. Who would think they could just walk away with a new iPhone/HTC one/galaxy s4, having only paid a few months and tmobile not say anything. Even if they don't necessarily clarify it I think this would fall under the realm of common sense. You can even trade it back in for part of the value or sell it to recoup most of the cost to pay it off. I've definitely thought different advertisements from places including where I work has been misleading, but I fail to see it here.
You miss the point.
If you are fed up with T-Mo, you SHOULD be able to walk away from the service contract and still make payments towards the phone, and take your phone to another carrier.
No one was expecting to walk away scott free. They were expecting to pay off the phone but move to a carrier that actually has towers in their area.
T-Mo won't let you pay off the phone via installment payments. They demand full payment.
"T-Mo won't let you pay off the phone via installment payments. They demand full payment."
Which makes sense if you think about it. Why would they want to give you an interest-free loan on a device that you are going to take to another carrier? T-Mobile needs to make this more clear in their marketing, as has been agreed, and everyone will be happy.
Interest free only matters if you don't already have a huge markup. But since T-Mo does mark up the handsets to full retail, they already made money on you even without interest.
Actually they don't. If you compare T-Mobile's prices to retail (whether suggested retail, 3rd party, or what other carriers charge off-contract) and you will see they charge less than that. If interest free didn't matter, Verizon wouldn't be charging a financing charge. T-Mobile still has to pay for that phone up front, so by allowing you to finance it interest free definitely matters. Tell your local car dealership that they should let every consumer buy their cars interest free since the dealership is already making some money....see how far you get!
Exactly! Chris is 100% right! I went to T-Mobile 2 weeks ago defecting from Sprint. I got a Nexus 4 (which I will trade for a HTC One tomorrow) and I paid 40% of the phone down. That left me with the remainder, which I can pay off in about 3-4 months. After, I can do what I want with anyone, being that i'm not tied to T-Mobile whatsoever. No contract, and most importantly no ETF! I can even get another phone if I want under the same circumstances. It's a much better plan, and they do explain everything to you as they did me. Anyone that didn't get that point didn't pay attention and just signed away!
I'm thinking of making the same switch from Sprint to T-Mobile. Which area are you in? How's the service??? How has your customer experience been.
I love it much better than Sprint! I'm in L.A. which you would think I would have the best coverage, but it drops and the data is very very slow under Sprint, ad that was under LTE too. I like that I have no dropped calls, even though I have an HSPA+ phone with the Nexus 4, the data is 4 times faster than what sprint ever gave me! The customer service is on point and fair. It's cheaper with their Unlimited Uncapped at $70. Sprints is 70+10 and it's slow as hell.
First! But seriously ... too bad this wouldn't also cover T-Mobile's threats against customers that they suspect are tethering without a plan option. Someone in the forums mentioned getting an e-mail directing the customer to "activate tethering option" on the web site "to avoid problems."
I still don't see how the carriers (and un-carriers) can get away with charging double for data by demanding a tethering fee, not to mention demanding a fee to "enable" a feature than an unlocked, unrestricted phone does just fine by itself. >:(
http://forums.androidcentral.com/google-nexus-4/259268-nexus-4-tethering...
agreed...it's not like my home ISP charges for a router to connect multiple devices to the same internet connection. It's a bunch of BS.
Because a tethered device will use significantly more data than the phone itself. Plus TMobiles 2tb tethered plan is the same price as there untethered plan.
Some apparently do.
http://www.reddit.com/r/rage/comments/1c7wlm/a_real_customer_service_con...
I've used up to 50 gb in one month on vzw. I recorded 1080 HD videos on vacation and then uploaded them all to my Drive account because my nexus only has 32 gb. 1gb of 1080 HD is less than 10 minutes of video. That is complete BS to threaten customers.
C-Block rules given by the FCC sates they can not keep you from using tethering apps and it is greedy and stupid to charge you for using your data which you already pay for.
Some people. When you sign up for service, your contract is for data for your phone. If you link a laptop to it, you're using your service for something not in the contract. I don't use my phone for data very much. I use my laptop and desktop to do a lot of things on the net (norp). Most people are probably like me, although my niece only has mobile internet service, and doesn't have a laptop or desktop.
Why shouldn't they charge more when you're going to use more.
Also, just because the guy who hooked up your cable or dsl turns a blind eye to your router, doesn't mean the cable or dsl provider wouldn't charge you more if they knew about it. Most ISP's do have a plan with an additional charge if they provide a router for you.
That's fine, except when the data is not unlimited. If I'm paying for 3gb a month, I should be able to use that 3gb however I damn well please. It's like the water company charging you extra if you want to wash dishes.