T-Mobile Offers Refunds for 'No-Contract' Offer

(Credit: Stephen Yang/Bloomberg/Getty Images)

Mobile phone users who purchased T-Mobile equipment and financed the purchase using T-Mobile's Equipment Installment Plan may be eligible for a refund after the company settled alleged a suit over "deceptive advertising" of its "no-contract" plans.

On Thursday, Washington State Attorney General Bob Ferguson filed a court order agreement with T-Mobile to correct advertising that promised consumers no annual contracts but which had hidden charges for early termination.

The agreement was signed by T-Mobile and is effective nationwide, ensuring the company "clearly communicates the limitations" of its new "no-contract" wireless service plans. The agreement also allows customers "duped" by the deceptive ads to end their contracts in which they financed their phones with no penalty, according to Ferguson's office.

READ MORE: T-Mobile's New No-Contract Plans Explained

Jeff Blyskal, senior editor with Consumer Reports, said he was surprised by the agreement because T-Mobile has positioned itself as the "un-carrier" phone company that did not have contracts. But still, Blyskal said T-Mobile has better terms than other phone carriers because they eventually halt phone subsidy repayment fees after about two years.

"The whole bit about contracts, cell phones and cell phone service is very confusing, because it's been made confusing by cellular service carriers," Blyskal said.

T-Mobile agreed to pay $26,046 in attorneys' fees and costs to the Washington Attorney General's Office.

T-Mobile USA, based in Bellevue, Wash., recently launched a wireless service plan that claimed to offer "no restrictions," "no annual contract" and no requirement that the consumer "serve a two-year sentence," the Washington State Attorney General's office said. The plan does not include a phone but T-Mobile gave the option for consumers to use their own phone, pay for a phone up front, or buy a phone at a monthly rate over a two-year term.

"After an investigation of the company's practices, the Attorney General's Office learned that the company failed to adequately disclose that customers who purchase a phone using the 24-month payment plan must carry a wireless service agreement with T-Mobile for the entire 24 months-or pay the full balance owed on phone if they cancel earlier," the AG said in a statement.

Customers who purchased T-mobile service plans and equipment under this plan between March 26 and April 25, 2013 may be able to obtain a full refund by calling T-mobile at 1-877-746-0909 or dial 611 from their T-mobile phone for more information.

"While we believe our advertising was truthful and appropriate, we voluntarily agreed to this arrangement with the Washington AG in this spirit," said T-Mobile in a statement to Consumerist.com.

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