For Immediate Release
For More Info: Matt Painter 646/705.3128 or matthew.painter[at]changetowin.org
Drew Zimmerman 646/943.0687 or drew.zimmerman[at]changetowin.org
FCC Complaint Alleges Fraudulent Enrollment and Deceptive Advertising at T-Mobile
FCC filing based on a review of 5,500 consumer complaints and employee interviews uncovers evidence that T-Mobile fraudulently enrolls customers in services without their consent.
Nearly half of fraudulent enrollment complaints were based on add-on services such as phone insurance plans or unlimited data offerings.
Complaint also calls on the FCC to end T-Mobile’s deceptive “no contract” and rebate claims.
Complaint comes as T-Mobile faces scrutiny for controversial Binge On service and a New York Attorney General investigation.
WASHINGTON, January 27—A complaint filed today with the Federal Communications Commission is calling for an investigation into T-Mobile (NYSE: TMUS) for fraudulently enrolling subscribers into costly, unwanted add-on services. The complaint reveals new information about the underbelly of the nation’s fastest growing mobile phone company.
Consumer and labor group Change to Win Retail Initiatives (CtW) is also asking the FCC to curb advertising that misrepresents T-Mobile’s payment of early termination fees when consumers switch carriers and the company’s misleading “no contract” claims.
“From the duplicitous ads driving customers into stores to the enrollment in services without consumers’ consent, T-Mobile has perpetrated a pattern of deception at virtually every stage of its Un-Carrier promotion,” said Change to Win Retail Initiatives Research Director Nell Geiser. “T-Mobile gets credit for changing the mobile industry, but should not get a free pass when it deceives and cheats consumers.”
Unauthorized enrollment issues accounted for ten percent of the 5,500 consumer complaints CtW reviewed from the FCC, the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB) and the Better Business Bureau (BBB).
Fraudulent enrollment in add-on services such as phone insurance plans, upgrade plans and unlimited data offerings accounted for 45 percent of these complaints, and ten percent were related to the activation of an account without the customer’s consent. Some customers also reported encountering problems when attempting to cancel these unwanted services.
According to the complaint, the widespread nature of enrollment complaints indicates the problem stems from corporate policies that encourage fraudulent additions to consumers’ bills.
Retail employees say that not meeting high corporate sales target for add-on services—between 80 and 90 percent of new accounts—can result in discipline or termination. Some employees report explicit instructions from their management to enroll customers in services without their consent.
The FCC has previously cracked down on unauthorized charges, or cramming, and has expressed disapproval of employee compensation structures that incentivize conduct that fraudulently inflates consumers’ bills.
The complaint also details how T-Mobile represents to consumers that it has no contracts when, in fact, T-Mobile has linked its month-to-month service contracts to two-year equipment financing plans. CtW filed a complaint with the CFPB in December making a similar argument.
Additionally, the complaint outlines how T-Mobile misleads consumers on another key component of its “Un-Carrier” platform: the method, timing and eligibility for reimbursement of consumers’ early termination fees (ETFs) or equipment installment plans (EIPs) if they switch from a competing carrier. CtW released a report Unmasking the Un-Carrier with these findings as well.
In December 2015, the Attorney General of New York announced an investigation into T-Mobile’s advertising practices.
The company has also come under fire in recent weeks for its controversial Binge On video service, which critics say lacks adequate disclosure of how the program works and how it will affect consumers’ ability to stream video from services not participating in the offering. Internet-user advocacy groups like the Electronic Frontier Foundation have called Binge On a violation of Net Neutrality principles, and criticized the company for automatically opting customers in to a service that throttles video streaming from apps and websites across-the-board.
“The lack of transparency regarding Binge On is consistent with T-Mobile’s Un-Carrier modus operandi,” said CtW’s Geiser. “The company doesn’t give consumers accurate or adequate information, and it’s time that regulators took a serious look.”
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Groups Call for Federal Investigation into T-Mobile’s Deceptive Advertising and Abusive Debt Collection Policies
- Leading civil rights, consumer and labor organizations call for the CFPB to stop deceptive advertising and unethical debt collection practices at the nation’s fastest growing wireless company.
- The regulatory complaint and a related report released today allege that T-Mobile’s customers in low-income communities and communities of color are hit hardest by the company’s unethical behavior.
- Call for investigation and report are based on a review of 5,500 consumer complaints and analysis of hundreds of T-Mobile advertisements.
WASHINGTON, December 8—A coalition of leading civil rights, consumer, labor and social justice organizations are calling for the Consumer Financial Protection Bureau (CFPB) to investigate misleading advertisements and abusive debt collection practices at T-Mobile (NYSE: TMUS).
In a complaint and supporting letter submitted to the CFPB today, the groups ask the agency to curb T-Mobile’s misleading “no contract” claims, which can stick consumers with hundreds—even thousands—in unexpected expenses. The coalition also wants the CFPB to investigate T-Mobile’s “abusive pattern of debt collection practices.” Six groups including Color of Change, League of United Latin American Citizens (LULAC), U.S. Action and Consumer Federation of California signed the letter in support of Change to Win Retail Initiatives’ complaint.
The company’s unethical behavior often hits low-income communities and communities of color hardest, the groups say. T-Mobile has depended on these populations for growth, often targeting its ads and locating its stores with them in mind. More than half of T-Mobile customers are people of color and about half have subprime credit scores.
“T-Mobile’s unethical behavior is particularly troubling because the company’s customer base is disproportionately made up of people of color, and Latino and African American consumers are more reliant on mobile for phone service and internet access,” said Brent Wilkes, Executive Director of LULAC. “T-Mobile claims to be an industry trendsetter, and we hope that swift action by the CFPB will make it a leader in honesty and integrity.”
CtW’s complaint was based on an analysis of more than 5,500 consumer complaints filed with federal agencies and the Better Business Bureau (BBB) since 2013, when the company launched its “Un-Carrier” program. Researchers also scrutinized T-Mobile advertisements across media channels and in its stores.
The complaint details how T-Mobile’s represents to consumers that it has no contracts when, in fact, T-Mobile has linked its month-to-month service contracts to two-year equipment financing plans. The result is that roughly 90 percent of customers enter into contracts with financial penalties for early termination.
The complaint also paints a picture of a company without a consistent, clear or fair process to dispute billing issues and collection notices. A full 71 percent of consumers with accounts in collection said that T-Mobile gave incorrect information to debt collection agencies.
Nearly half (49 percent) of consumers with issues related to collection reported little-to-no notice of the debt before it was referred to an agency. A substantial number also claimed that the company either blocked access or provided no easy method for accessing information needed to dispute the charge.
“It is profoundly disappointing that T-Mobile markets itself as a provider of equal access, but its misleading claims and aggressive debt collection likely have a disparate impact on communities of color and low income consumers,” said Rashad Robinson, Executive Director of Color of Change. “We believe an investigation is necessary, and will hopefully force much needed change at the company.”
The complaint urges the CFPB to make T-Mobile to live up to its consumer-friendly rhetoric, and calls for reforms such as abandoning claims of “no contract” and “no commitment.” The groups are also calling for the agency to spur T-Mobile to overhaul its debt collection policies.
“We fear that without swift action by the CFPB, millions of more consumers will be put in harm’s way by T-Mobile’s misleading claims and unfair debt collection practices,” said Nell Geiser, Research Director for Change to Win Retail Initiatives.
In addition to the CFPB regulatory filing, CtW released a report today, Unmasking the Un-Carrier, finding that T-Mobile misleads consumers on another key component of its “Un-Carrier” platform: the method, timing and eligibility for payment of consumers’ early termination fees (ETFs) or equipment installment plans (EIPs) if they switch from a competing carrier.
The report notes that T-Mobile has a higher total number of consumer complaints lodged with the Better Business Bureau than its larger competitors AT&T and Verizon. It also had a higher number of debt collection related complaints than its two larger competitors when adjusted for market share.
The groups have launched an online campaign to curb T-Mobile’s abuses, available here. The full report can be found at www.CallingOutTMobile.org.