Deceptive Marketing Allegations

Washington State Attorney General Bob Ferguson has entered into a voluntary court-ordered agreement with T-Mobile addressing alleged deceptive marketing associated with T-Mobile’s campaign promoting “no restrictions,” “no annual contract” wireless service plans.  According to Ferguson, the “no contract” claim is deceptive because there are, potentially, hidden costs and penalties.

For example, if consumers that obtained phones as part of their wireless service plan chose to defer the cost of the phone over a 24-month period, those consumers could be hit with a balloon payment for the phone if they canceled their contract during that 24-month period.  Under certain circumstances, the balloon payment could be higher than termination fees charged by other wireless carriers.

Pursuant to the court ordered agreement, which applies nationwide, T-Mobile agreed not to:

  • Misrepresent consumers’ obligations under its contracts, including those contracts that have not restrictions or limitations; and

  • Fail to adequately disclose that customers who terminate their T-Mobile wireless service before their device is paid off will have to pay the balance due on the phone at the time of cancellation.

Lessons to Be Learned

As the T-Mobile case makes clear, it is essential that companies take measures to ensure that their marketing materials and messages are accurate, and that the necessary disclosures are included in each instance.  This is especially true when making claims related to services being “free” or without restrictions, as such marketing messages will likely attract additional attention from regulators.  Entities that fail to comply with state and federal deceptive marketing laws could find themselves facing regulatory action from the numerous state attorneys general and/or the Federal Trade Commission, which could result in significant fines being levied, as well as other costs.

If you are interested in learning more about this topic or need to review your marketing materials, messaging and/or disclosures based on this action, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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