September 5, 2019
Lawsuit alleges T-Mobile violated the City’s Consumer Protection Law by selling used phones as new, destroying customer credit scores, and using deceptive return polices, among other violations
NEW YORK—Mayor de Blasio and Department of Consumer and Worker Protection (DCWP) Commissioner Lorelei Salas today announced a lawsuit in the New York County Supreme Court against T-Mobile USA, Inc. (T-Mobile), the nation’s third largest wireless carrier, for violating the City’s Consumer Protection Law. The City alleges that T-Mobile has engaged in multiple deceptive practices, including selling used phones as new, enrolling customers in expensive financing plans without their consent, deceiving consumers about its refund policy, overcharging customers and failing to provide customers with legal receipts. The lawsuit alleges that T-Mobile, its subsidiary MetroPCS NY, and more than 50 of its authorized dealers and corporate stores across New York City violated the City’s Consumer Protection Law thousands of times.
“Companies that blatantly scam New Yorkers must be held accountable,” said Mayor de Blasio. “We are doing everything in our power to make sure that T-Mobile ends these deceptive practices and that customers who were taken advantage of get the restitution they are owed.”
“At the same time T-Mobile touts its Metro products and service and its great customer service ratings, its Metro by T-Mobile stores are scamming New Yorkers into buying used phones, tacking on additional costs, enrolling them in financing that’s destroying their credit, and then trapping them with their deceptive return policy and incomplete receipts,” said DCWP Commissioner Lorelei Salas. “T-Mobile’s rampant and repeated deception is made more troubling by the fact that these tactics particularly harm consumers who are simply seeking to find an affordable wireless plan.”
T-Mobile preyed on consumers who were buying phones from Metro by T-Mobile (Metro), which was formerly known as MetroPCS and is T-Mobile’s lower-priced prepaid (no contract) wireless service. Because Metro’s service does not involve contracts, it appeals to consumers who do not have a strong credit history. These consumers have limited wireless service options and are especially vulnerable to scams. The City is seeking for T-Mobile to stop all illegal activity, to forfeit the revenue gained from the deceptive practices so that the court can create a restitution fund for victims, to notify all major credit bureaus that the financing contracts were fraudulent so that related information can be removed from the consumers’ credit reports, and to pay civil penalties.
T-Mobile has more than 83.1 million customers. In 2013, T-Mobile merged with MetroPCS, which already served consumers using a lower-priced, prepaid, no-contract model. In 2018, T-Mobile rebranded the lower-priced prepaid service as “Metro by T-Mobile,” promising “a new brand and new mission to give value-conscious consumers a trade-off free wireless experience.”
Following a year-long investigation, the lawsuit alleges, among other things, that T-Mobile’s deception practices include:
Most businesses that sell electronic items (like cell phones, laptops, tablets, cameras, and TVs) must have an electronic store license. Most of the Metro stores are licensed, however, if a store has less than 30 electronic items on display or if the area used to display the electronics is less than 20 percent of the public area of the store, it does not need an electronic store license. There are currently 2,967 licensed electronic stores. In 2018, DCWP conducted more than 2,900 inspections of electronic stores and issued more than 490 violations. In 2018, DCWP received approximately 1,035 complaints about electronic stores, making it the sixth most common category of complaint. The most common electronic store complaints are about the total selling price of items not being displayed, breach of contracts, and overcharging. Consumers can learn tips for buying electronics here and file a complaint at nyc.gov/dcwp or by calling 311.
DCWP’s lawsuit is being handled by Senior Staff Counsel Glenna Goldis, under the supervision of Associate General Counsel Nicole Arrindell of the General Counsel Division, which is led by General Counsel Tamala Boyd and Deputy General Counsel Michael Tiger.
“It is disturbing that T-Mobile would allegedly engage in these dishonest practices, taking advantage of working New Yorkers who are simply trying to find an affordable wireless plan. I thank the City for stepping forward and seeking justice for those who have been harmed or deceived by this unscrupulous behavior,” said Representative Nydia M. Velázquez.
“As Chair of the Assembly Committee on Consumer Affairs and Protection, I am disappointed by the allegations made against T-Mobile. I appreciate that the City has taken action, and I am hopeful that consumers receive appropriate redress of their grievances.” said Assembly Member Michael G. DenDekker.
"Deceptive and fraudulent is not how any customer would want to describe the business they're purchasing products or services from. Yet T-Mobile lives up to these descriptors as they prey upon New Yorkers, all in the pursuit of turning a profit. In targeting vulnerable consumer with no contract deals, masking used products as new, among other grievances, T-Mobile treated their customers as opportunities, not people," said Council Member Rafael Espinal. "As Chair of the Committee on Consumer Affairs and Business Licensing, I am especially aware of the caliber we hold businesses to in New York City. T-Mobile should be ashamed of failing to meet this caliber by not only breaking the law but doing so in such a callous and harmful way to New Yorkers."