T-Mobile's 'No Contract' Deal Deceptive: Critics

T-Mobile's "No Contract" deal is supposed to let a customer sever their relationship with the wireless carrier at any moment. However, Washington state officials have ordered the firm to offer refunds to people who didn't realize that quitting the contract would come with a fee.

With most smartphone deals, the user only pays a portion of the cost of the handset, while the service provider picks up the rest of the tab. In return, the user is tied to a minimum service term (usually lasting two to three years), during which they must pay a steep early termination fee if they choose to cancel the deal.

The T-Mobile deal works differently. For one, you can bring your own handset into the deal. Alternatively, you can buy a new phone from T-Mobile and pay for it in monthly installments. These monthly fees are counted as separate from the monthly service charge. (Source: pcmag.com)

Advertising Touts "No Restriction"

When advertising the deal T-Mobile said that customers could cancel the service at any time without having to pay a cancellation fee. T-Mobile's advertising included terms like "no restriction," and "no annual contract."

However, the Washington state attorney general's office says such advertising downplayed an important loophole. It turns out that if you cancel the service deal you no longer have to pay for service, but you do have to pay the entire remaining balance on the handset itself.

That means you can't simply carry on paying it off in monthly installments.

The officials said this obligation means there is clearly a financial penalty for canceling the service: although you don't wind up paying any extra money for the handset, you will be responsible for paying a lump sum to complete the handset purchase. (Source: wa.gov)

T-Mobile To Make Advertising Clearer

Following an investigation, the attorney general's office has now reached an agreement with T-Mobile. The firm has agreed to revise its advertising to make the deal's conditions clearer to customers.

The Washington state agreement also means that any customers who signed up for the T-Mobile deal between its launch on March 26 and April 25, 2013, can cancel the deal without penalty.

However, they'll have to return the handset and will get a refund of any monthly fee they've already paid towards the phone.