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:
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:
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. 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:
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:
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.
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.
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. 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.”
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.