CFPB as cudgel: Unions file complaint against T-Mobile

Change to Win, a union federation, has asked the CoFPB to investigate wireless carrier T-Mobile for “misleading advertisements and abusive debt collection practices” related to its no-contract cell phone service.

Change to Win, a union federation based in Washington, D.C., has asked the Consumer Financial Protection Bureau to investigate wireless carrier T-Mobile for “misleading advertisements and abusive debt collection practices” related to its no-contract cell phone service.

The complaint is curious, as T-Mobile has already faced scrutiny for it advertising and entered into a $26,000 settlement in Seattle two years ago. T-Mobile’s advertising has not changed since then, but T-Mobile has been in a long struggle with a Change to Win affiliate, Communications Workers of America (CWA), over unionizing T-Mobile employees. Earlier this year, an administrative law judge at the National Labor Relations Board ruled that T-Mobile interfered with employees’ rights to organize a union through a range of corporate policies. That complaint was filed by CWA, which already represents employees at Verizon and AT&T.

When T-Mobile ended two-year service contracts in 2013, it unbundled phone service from the cost of the phone. It then created a 2-year financing agreement, the Equipment Installment Plan (EIP). Under EIP, customers pay for phones that often cost more than $600. For phone service, customers can now pay month-to-month, without a two-year obligation.

According to the complaint, Change to Win thinks T-Mobile’s no-contract marketing campaign deceives customers who finance the cost of their phone through T-Mobile into believing they will not face a penalty for terminating their service. However, if the service is canceled before the phone is paid for, the customer is still obligated to pay off the remaining balance on the phone. T-Mobile’s deceptive marketing “may exacerbate customers’ confusion and vulnerability to delinquency,” according to Change to Win. They argue that once a customer cancels his or her phone service and receives a bill for the rest of the amount due on the phone, T-Mobile gives little to no notice before referring him or her to collections.

The complaint also says that T-Mobile makes it difficult for people to contest debts, which are often more than the traditional early termination fee associated with service contracts, and that the company often gives incorrect information about accounts to the collection agencies.

Even though other wireless carriers have started similar installment plans, Change to Win’s complaint is focused solely on T-Mobile. They have issued complaints to several Attorney General offices and have indicated that they plan to lodge a complaint with the Federal Communications Commission as well.

Fredrikson & Byron Law