T-Mobile hangs up its 'deceptive' ad campaign

The wireless carrier must now rethink its strategy after Washington state's attorney general put the kibosh on its marketing approach.

By Jonathan Berr Apr 26, 2013 10:58AM
File photo of a T-Mobile store in Times Square, New York City on March 18, 2008 (© Mark Lennihan/AP)T-Mobile, the fourth-largest wireless provider,  thought it had come up with a winning strategy to retake customers from AT&T (T) and Verizon Wireless (VZ) by marketing itself as the hassle-free "un-carrier." Too bad Washington state Attorney General Bob Ferguson found the ads to be deceptive. Now the company has agreed to a court order to change its tune.

Under T-Mobile's "no-contract" plan,  customers were required to buy their own phone, though they could pay off their balance over a two-year period. The company didn't properly disclose to customers that they were required to carry a wireless service for the entire period or pay the full balance owed on the phone if they canceled their order earlier. Customers who purchased T-Mobile service and equipment between March 26 and April 25 are eligible for refunds. T-Mobile denies wrongdoing.

The question for the Deutsche Telekom wireless unit is what to do now to gain an edge in the fiercely competitive wireless market.

Last year, AT&T's plan to acquire T-Mobile was quashed by the U.S. Department of Justice on antitrust grounds. T-Mobile is now in the process of acquiring No. 5 player MetroPCS (PCS), and it began carrying the Apple (AAPL) iPhone April 12, so things are starting to look a bit better.

As TechCrunch recently noted, T-Mobile is losing fewer customers, particularly the lucrative postpaid customers. Nonetheless, it's still losing them, bleeding 199,000 in the most recent quarter. The carrier is also picking up more prepaid customers, gaining 1.7 million over the past seven quarters.

Its rivals, however, did better.

AT&T added 296,000 wireless customers in the second quarter. The company's wireless margins were its best ever, and its churn rate -- a measure of how many customers quit -- hit a record low.

Verizon, which may be buying out Vodofone's (VOD) stake in Verizon Wireless, added 677,000 retail postpaid net connections. The company's customer additions on this basis increased sequentially in every quarter last year, and it expects to repeat that trend this year.

Sprint (S), the third-largest carrier, is the subject of a takeover war between Japan's Softbank and John Malone's Dish Network (DISH). It continues to struggle as well, losing about 560,000 subscribers in the latest quarter, worse than analysts expected.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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68Comments
Apr 26, 2013 11:32AM
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I thought that their web page was very clear on this issue. You get discounted service and you buy the phone at full price. In what world would you expect to get your money back on the phone ?  The discounted phones they used to offer resulted in higher monthly contract costs than the new plan has.

 

Apr 26, 2013 3:01PM
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I can't bring myself to pay more than $50 for a phone. i considered looking into tmobile to see if you end up paying more or less with the reduced monthly fees. can't we just go back to landlines and $20 monthly phone bills? people are so dependent on their phones anymore they'll pay top dollar (evenif they can't afford it) just to have the best phone. We're so connected to our phones we can't even go out with friends withouth texting or connecting in some way with others. We don't stop and chat with people we haven't seen in ages since we can just catch up on facebook. I fear this dependency on phones, social websites and other technological things will lead to a scary crash of some sort. We won't be able to function cause some of us don't know what life is without a cell phone.
Apr 26, 2013 12:58PM
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Just more people expecting something for nothing.  They were basically loaning you money for the phone by allowing you to pay over a period of time on your monthly bill.  In what world if you stop using the service do you not have to repay any loans you owe?
Apr 26, 2013 2:04PM
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I hate that after the smug out right statement last year by Verizon's CEO that basically they planned to screw every loyal , on time paying, Verizon customer out of any of the old unlimited plans. Any change that you make to your account, yes any, negates the unlimited plans held by current customers. There-by underhandedly forcing plans with much higher cost on customers that excuse me are the  very  reason for Verizon's financial success. I would tell them to stick it if any of the other carriers had the coverage that Verizon has. We as American consumers are getting the shaft from every angle. No way to make a living that provides the money that is gouged out of our dwindling food budget's by falsely inflated gas prices into a classic "Catch 22". The cost of every thing that goes into living has increased exponentially except income and the jobs needed to make that income. News flash the heaping majority of tax revenue falls on the middle class that no longer exist. Funny thing and not the ha-ha kind our government leaders that are suppose to be the "cream of the crop" have failed at the most basic fundamental teaching for first and second grade level . . . you cannot take away(spend) more than you have!  
Apr 26, 2013 1:15PM
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Hmmm I've been a T Mobile customer for over 12 years, They were the only company that had GSM phones that I could use overseas at the time. The customer service was light years ahead of my prior provider (Bell South/AT&T). better than my companies old (pre Blackberry) provider AT&T, then SPRINT. We now have Verizon, no problems until you want to use your phone in Europe, phone works but Verizon has no plan for roaming there.

As for my persona T-Mobile phones, I've used them across the US and Canada, England, France, Germany, Switzerland, Austria, Hungry, Italy, Austria etc. Always great service, not to say that there hasn't been spots without service, but my company phones and carriers has same issues.

Apr 26, 2013 4:22PM
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I don't know what happened to T Mobile. I have been with them for a very long time and never had any problems. Always paid my bill on time, never past due one time.  All of a sudden in November of last year I get a letter telling me they will be ending the plan I have been on since day ONE and that I have to pick another plan.  SO, I call them and they try to sell me the exact same plan I already have but want me to pay about 20 more dollars a month. I tell them I already have that plan and I will not pay more for it, they tell me the only way I can keep what I have is to go under a new two year contract. I have not been under any contract with them since the last one ended years ago.  So I now have to sign up every two years to keep what I have had since day 1?  Fine, ok I will do that but I think it is crappy they are making me sign up for two years (and if anything happens to where I can no longer pay? I have a penalty.)  just to keep what I already had.

THEN, I get two bills from them, one for the plan they told me I had to give up and one for the NEW plan.  I call them and am told by two very RUDE customer service reps that I HAVE to pay both.  I go back and forth and am about ready to hurt someone badly because they refuse to understand what I am telling them. That I have a letter telling me I HAVE to get a new plan, and they keep telling me I have to pay both bills for the old and the new plan which are the SAME plan for the same money...they just got a contract for two years out of me to keep the same thing. And now I can't go to another carrier without paying a penalty for early termination of the contact that JUST got me to agree to, and they know it.   I told them to try and get the money from me, just try.   Finally I hang up and call back and get another rep who listened to me, understood what had happened and canceled the bill from the old plan so I did not have to pay it.  Also, those other reps thought I was a brand new customer because all the payments I made to that old plan for all those years? GONE.  Everything I had done, all the payments that showed T Mobile that I was a great customer to them was erased. WTH has happened to this company?  I tell you this, I hate them so much and there is no way I will be with them when I am done with this new contract.   I should have gone with another carrier when I was told I had to sign a two year contract just to keep what I had with them for years, but I have been with them for a very long time. Staying just because you  have been with a company for so long is a mistake and it is one I will never make again.   I just changed auto insurance (Allstate to Progressive) and saved almost 500 bucks a year AND was able to get Comp and Coll instead of just Liability.   Anyways, T Mobile will be out of my life as soon as this contract is up.   I no longer tell my family and friends that they are a good company.  I now tell them what they did this last time and how bad I was treated by them, when all I have done is be a great customer to them. 

Apr 26, 2013 1:58PM
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I have T-mobile with 3 lines in service. One line no data, because I don't need it. I use a computer to get what I need. Next phone when I got it for wife, she knew little about data, games and such so T-mobile suggested 200 MB would be enough. Third line is for a teen and as one wound expect he needs more bandwidth than a business (wonder when he gets time to go to school??).

 

Well, wife has progressed to wanting to do everything on her line. Uses chunks of data at 27 MB at a time. So, called T-mobile and wanted to change plan to unlimited. Common sense would think they'd allow me to drop 200 MB cost and then add in unlimited cost. And, we all would be wrong. I'm told that I have a contract with months still on this phone and must pay for the voice, text and 200MB data and if I want Unlimited data an additional $30 a month also. I am getting some discounts (disabled vet., good customer and one more I can't remember) but, bill still runs between $160 and $190 a month. All the while they are giving new customers new rate of $50/line. Seems like they are not so much interest in helping long time customer, just trying to get new meat so they can screw them later.

 

We will be gone in September as soon as contracts start to end.

 

By the way, "phone insurance" is a bunch of crap. Can't figure what it's for. We've had three phone go bad...mine from sweat (water) while in pocket, the wive's got stolen and the third one for the boy just quit working and in each case had to pay some for replacement and incurred contract extention on top of these cost.

 

And then we coud talk about calling customer service and getting "hello,my name is Sam, may I help you?" in a foreign accent....give us a break.

Apr 26, 2013 4:11PM
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the vast majority of advertisements are fraud, absolute lies...and disclaimed in unreadable print
Apr 26, 2013 5:50PM
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Perhaps T-Mobile is really losing customers because of their customer service. For example, I purchased a $100 prepaid card and added it to my phone. However, T-Mobile somehow credited it to someone else's number. When I called them on it, they initially said they couldn't do anything about it and I would have to go back W**mart where I bought it. I went back and even though they were very nice there and tried to help, they got the run around, too.

 

Finally, I went into a T-Mobile store and they called and could not believe it when T-mobile said even though they could see I had re-upped via my phone, I had the card and the receipt, they "couldn't refund the money because the other person had already used half of it." WHAT?!!!

 

Bye-bye T-Mobile.

Apr 26, 2013 11:58AM
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Maybe if their service didn't suck, they'd have more customers. Their phones don't even work where I live. Worked at a motel, and had people say, "We were going to call, but couldn't get a signal." Invariably it was because they were on T-Mobile.
Apr 26, 2013 1:54PM
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The problem with Tmobile, and other carriers is that they have an extremely tight script they must stick to on every call and a number of seconds in which they must say it all to you and get you off the line.  They really don't have much time left to help with your issue because they are required to check your account, look for things they can sell you, check if you're eligible for a phone upgrade, offer all that to you, ask you multiple times if that satisfied your reason for the call.  If you refuse to hear any of that and try to cut through the nonsense to get an answer the agent will just pass you to another department.  They are underpaid, and severely stressed out from the list of 'metrics' they must meet to keep their jobs.  I know, because I have worked there, my brother has, and his wife as well.  tmobile trains its employees to offer crappy service because they have so many things they must do in the call to keep their job they just don't have time to really help you.

 

Apr 26, 2013 6:06PM
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Meh.  Who cares?   All cell carriers are about the same quality crap in different wrappers.
Apr 26, 2013 1:05PM
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I was up for a phone upgrade right at the time they started their new promotion.  Not impressed with this 2 year payoff, because I haven't paid full price for a phone the 7 years I've been with Tmobile, and it burns to think of starting to do so now.  I can stomach $399 (Barely) for the phone at it's discount price, but not $600+ no matter how long you stretch it out.  Go back to handset financing where people were allowed to pay off the phone in 3 payments.  I want the particular phone bad enough to consider changing to a carrier that discounts the phone.
Apr 26, 2013 2:37PM
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Sprint buys Nextel for about 34 billion??  Then has to write it off as a loss. And now It being bought for about 20 billion?? What Super Genius came up with that. BTW I used to work for Nextel, the service was good just didn't have the coverage. Better then AT&Turd!! 
Apr 27, 2013 5:12PM
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I have experience with all the 4 major carriers and like politicians they all suck!
Apr 26, 2013 7:31PM
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This is kind of a "duh". People always think they're going to get something for nothing, then sue when they don't. What I want to know is if you own your phone, can you get away with this service plan? That's the way it is in Germany...
Apr 27, 2013 3:35PM
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A company that lied? I am so distraught that I must drown my sorrow

with some fresh mozzarella, basil, extra virgin olive oil, olives and garlic.

 

Apr 26, 2013 3:38PM
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I have three phones with T-Mobile all with unlimited talk text and data. We pay 130.00 a month (this includes all taxes and fees) for all 3 phones. No other provider comes close. They have always had great customer service. I buy my own phones so have never had to worry about it. They have fast data and I rarely miss calls.
Apr 26, 2013 3:32PM
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this was merely a veiled attempt to trick people into thinking they were under a contract.  it was just an undisclosed contract but, a contract just the same.  very unethical.
Apr 27, 2013 12:00PM
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I guess they are required to dumb things down for people.  I understood clearly how it worked. 
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