CALLING OUT
UNETHICAL BUSINESS PRACTICES IN WASHINGTON
Calling Out T-Mobile

DECEPTIVE MARKETING

The Un-Carrier marketing platform makes two central claims that are misleading:

T-Mobile claims to offer service plans with “No Annual Contract”.

T-Mobile say it pays consumers’ early termination fees (ETFs) or equipment installment plans (EIPs) if they switch from a competing carrier. Both of these claims misrepresent fundamental facts about the underlying terms and conditions, causing consumers to be deceived and harmed.

Misleading “No Contract” Claims

T-Mobile boldly claims in its advertisements that it offers “no contracts” or “no annual contracts,” but in reality, T-Mobile’s equipment financing program keeps many customers in a two-year contract, just like before.

T-Mobile encourages customers to enroll in a 24-month equipment installment plan (EIP) that is linked to a month-to-month service agreement. Termination of the service agreement results in a customer’s outstanding balance for any phones and equipment becoming due immediately, an amount that is often larger than the traditional “early termination fee” because of the high cost of smartphones.

When signing up for service, customers are shown a coverage map to demonstrate the quality of service where they live and work, often a make-or-break aspect of the purchasing decision. T-Mobile presents this map as an accurate representation of its network.Yet, 22 percent of consumers with coverage problems said that T-Mobile used the coverage map to assure them that they would have reception.

Customers may have to break their contract due to coverage problems, which can lead to a significant financial penalty if the customer has an EIP. Twenty percent of the complaints that cited deceptive “no contract” claims by T-Mobile also reported problems with coverage.

A 2015 complaint to the BBB shows the high costs some consumers face:

“We are having trouble with our T-Mobile service . . . dropped calls not to mention not having a signal to make a call in our home. We are within the T-Mobile coverage so we are not sure why this is an issue. We need our phones. . . .After our continued efforts to stay with t-mobile we need reliable service and T-Mobile is telling us we cant give back the phones and we are going to have to pay them $1700 if we leave them.”

The company has faced regulatory scrutiny for its no contract claims. The Attorney General of Washington State concluded that the company had misrepresented consumers’ ability to cancel service without penalty. Yet T-Mobile continues to claim it has “no contracts.”

Broken Promises to Pay Consumers’ Early Termination Fees

T-Mobile is the only company in the industry with a standing offer to buy out customers’ service contracts and equipment.

Advertisements highlighting this offer mislead customers about what is required to receive the benefit. Most prominently, T-Mobile promises to “pay” customers’ ETFs or EIPs from other carriers, but, in reality, customers must pay upfront and will later be reimbursed with a prepaid VISA card, if they meet all requirements, including buying a new phone from T-Mobile.

CtW’s analysis of complaints indicates that processing and payment of ETFs and EIPs can take significantly longer than the eight weeks the company claims in its fine print.

Customer complaints also suggest that T-Mobile may be denying complaints improperly, even after a customer has submitted the required documentation. The misrepresentations about ETF and EIP reimbursement payments fall hardest on low-income consumers for whom the misrepresentation about the timing, form of payment and qualification process cause serious financial hardship and harm credit standing. Too many consumers may end up in scenarios like this one, reported to the FTC:

“T-mobile did not provide [us] with accurate information regarding the timeline for the Early Termination Fee (8-10 weeks) and we have an $804.00 bill due to [other carrier] . . . I feel this is false advertising and incompetent service as billing cycles are monthly and T-mobile should have a better practice (shorter wait period) in place to provide the Early termination fee. We now face the arduous task of being sent to a collections agency due to our $804.00 [other carrier] bill due to the time period of T-Mobile. . . .We have done everything on our part to assist in this process and now we are facing multiple financial burdens as they did not clearly advertise the timeline for Early Termination Fee Reimbursement.”

 
Reforms Needed:

Abandon claims of “No Contract” and “No Commitment.”

Because of the company’s misleading ads, T-Mobile consumers may mistakenly believe they can leave the company at any time with no financial consequences. But the reality for many T-Mobile customers is that when they end their service with the company, the remaining balance on their phones—which can cost over $700 apiece—becomes immediately due.

This creates a two-year agreement with T-Mobile and the company should stop making claims to the contrary in its advertisements with phrases like “no contract” or “no annual service contract.”

Stop using misleading language in advertisements for reimbursement of consumers’ ETFs and EIPs.

T-Mobile should remove from its advertisements phrases like “we pay your ETF” that imply T-Mobile will pay customers’ former carrier directly.

Streamline process for ETF and EIP reimbursement.

Given numerous consumer complaints, T-Mobile should invest in upgrading its infrastructure to quickly pay back the money it owes consumers.

Unfair Debt Collection Practices at the Un-Carrier

Consumer complaints analyzed by CtW paint a picture of a company without a consistent, clear or fair process to dispute billing issues and collections notices. Of the 1,293 debt collections complaints against T-Mobile analyzed by CtW, a full 71 percent of consumers with bills in collections said that T-Mobile gave incorrect information about their accounts to debt collections agencies.

Read More

A subscriber’s 2015 complaint exemplifies this problem. The company moved a disputed charge for two iPhones to collections even though the customer says he returned the phones and settled the account:

“I informed T-Mobile that I wanted to resolve the issue and have my balanced cleared before anything went into collections. Little did I know I started getting calls from a collection agency in regards to tmobile. They told me that T-Mobile had transferred my account to the collection due to non payment. As stated before I paid the account in full and made sure I didn’t owe them anything.”

After being notified of a bill in collections, many T-Mobile consumers say that they were locked out of their account or otherwise were not given access to their records to dispute potentially wrongful charges. One-out-of-seven T-Mobile subscribers who had complaints about collections said that they were denied access to necessary information about the debt:

“. . . [T-Mobile has] sent us to collections and have conveniently deleted/lost all the notes regarding my account. When I contacted the collection agency they say that T-MOBILE will not allow them to have a copy of the notes to my account and thus can’t give them to me either.”

Nearly half (49 percent) of consumers with issues related to collections reported little-to-no notice of the debt before it was referred to an agency. Even when consumers disputed a charge, more than 40 percent reported that T-Mobile still sent their account to collections. By contrast, it is illegal for credit card companies to send a disputed bill to collections until the company has conducted an investigation, determined the charge was valid, and sent a written explanation to the consumer of the decision.

Reforms Needed:

Overhaul debt collection policies.

T-Mobile should reevaluate its relationships with debt collection agencies with histories of abusive practices, and strengthen its review process for what accounts enter collections. The company should also give customers adequate notice of overdue payments before sending them to collections, and end its practice of sending accounts under dispute to collections.

Since many former subscribers said that there was no clear or easy way to obtain information about the amount alleged to be due, T-Mobile should make sure that complete, itemized information is available to the consumer and the debt collection agency.

For more information, download the report: Unmasking the Un-Carrier (PDF) or visit the National Consumer Law Center’s issue page on debt collection.

Customer Service Policies Push Pain Points

T-Mobile’s problems of deceptive marketing are well known to the company’s customer service representatives: they receive the initial blowback from the customers. The company’s policies put these workers under intense pressure to meet a strict set of metrics used to evaluate performance.

Read More

These metrics include benchmarks for the average duration of calls, the percentage of customer issues that are resolved with a single call and the sale of additional services. These standards may actually be undermining employees’ ability to help consumers because service representatives say they do not have enough time to process and resolve customers’ problems. One long-time call center worker said, “T-Mobile is the only place I have felt like a failure, the metrics are so unreachable. It is the only place where it feels like you have to bend the rules to make it.”

Reforms needed

Align customer service performance metrics with the needs of customers.

T-Mobile should alter the way it motivates the workforce that must troubleshoot problems with its Un-Carrier offerings. It should not penalize customer service representatives for spending extra time resolving EIP or ETF issues. Likewise, the company should encourage employees to address disputed charges on accounts.

By The Numbers

of stores visited had deceptive “no contract” advertisements as well as misleading ads about T-Mobile “paying” EIPs and ETFs for switching customers.
of T-Mobile consumers with an allegedly delinquent bill said that the company gave debt collections agencies incorrect information about their account.
of customers with collections complaints said that T-Mobile demanded full payment even when the company had misrepresented the debt or the subscriber had already paid the bill.

I was pleasantly surprised when I looked on the map and our area was highlighted in pink, which meant that there would be coverage in our area. Wanting to be sure, I called customer service and spoke to a representative for over a half hour. We have been regretting that decision ever since. From the moment we got our phones there has been nothing but problems.

Catherine J. | Read more at NJ.com

Half a year ago, I switched to T-Mobile because you promised to reimburse my cancellation fees and buy my iPhone 5S back. All these months later, you still owe me close to $500 between the $350 in cancellation fee and the price of the phone I sent you. I’m not asking for a favor, I’m simply asking T-Mobile to honor the contract we signed and reimburse the fees.

François H. | Brooklyn, NY

My early termination fee from Verizon was $1,791 but T-Mobile only approved $1,017, which means I had to pay $774 out of pocket to switch to T-Mobile.

Kris G. | Kent, WA

I switched to T-Mobile because of their Unlimited LTE Data Plan. They promise to deliver the highest speed available…Not So! Upon doing speed tests on their LTE network, I get speeds close to 2G network. So really Unlimited LTE should be called “Unlimited 2G speeds for a higher price”. What a ripoff from T-Mobile!

Kevin M. | Irving, TX

Six months after making the switch to T-Mobile, I’m still spending my whole day on the phone trying to get the money they owe me. Better Business Bureau, Consumer Affairs…here I come.

Laurie F. | Coconut Creek, FL

I followed the early termination fee process, which required I mail in my phone and final bill from my previous carrier. After raising five requests and calling customer service continually, I’ve seen no progress—and still out hundreds of dollars.

Sankara S. | Vienna, VA

Calling Out T-Mobile’s mission is to make the country’s fastest growing cell service provider live up to the pro-consumer promises it has failed to fulfill.

We are a project of the 5.5 million member Change to Win labor federation, which seeks to strengthen consumer protections and workers’ rights as part of our efforts to rebuild the middle class.

Cellular service has become a utility-like necessity for many in our society, especially for low-income consumers and communities of color who heavily rely on mobile devices for phone and Internet access. We believe these consumers are particularly harmed by T-Mobile’s misleading advertisements and aggressive debt collections practices.

Calling Out T-Mobile is working with a broad coalition of consumer, civil rights and labor organizations to push for reforms that will lead T-Mobile—and the cellular industry—to be more accountable to all consumers. In the coming months, we will continue to uncover the Un-Carrier’s un-ethical practices.

Please check back with us soon, and feel free to leave your T-Mobile story here.