T-Mobile Class Action Says ‘No Contract’ Plans Have Hidden Fees

T-Mobile USA Inc. has been hit with a class action lawsuit that alleges it misrepresented its “no contract” service plans and illegally charged customers a termination fee when they leave T-Mobile, in violation of Florida consumer protection laws.

“T-Mobile attracts customers by touting ‘no contract’ cell phone service plans without any hidden fees,” the T-Mobile class action lawsuit states. “In addition to service contracts, customers typically have a device contract for the financing of the cellular device. When a customer leaves T-Mobile, T-Mobile has a practice of unlawfully seeking the entire amount under the device contract as immediately due.”

Plaintiff Moshe Farhi claims that this practice is essentially an unlawful termination fee that violates the device contract. The class action lawsuit asserts that T-Mobile’s attempts to collect this fee from its customers are in violation of the Florida Deceptive and Unfair Trade Practices Act and the Florida Consumer Collection Practices Act.

According to the T-Mobile class action lawsuit, T-Mobile launched a media campaign that promises to do away with lengthy cell phone contracts and termination fees. However, the company allegedly misrepresents these “no contract” plans and charges termination fees when a customer chooses to leave T-Mobile.

The T-Mobile hidden fees class action lawsuit states that consumers who purchase the service are entering into two agreements: to purchase the actual device by paying for it in installments and to use the phone by selecting a service plan.

Farhi claims that T-Mobile does not prevent customers from leaving it for other providers, as it has promised in its advertisements. However, once a customer chooses to leave T-Mobile, the company sends bills for the entire amount of the device, even though the agreement allows customers to pay in installments.

“When T-Mobile attempts to recover the entire accelerated amount, it knows it has no right to seek this amount,” the T-Mobile class action lawsuit states. “Thus, T-Mobile has a practice of illegally accelerating contracts and attempting to collect illegal charges from consumers that are not owed.”

According to the T-Mobile hidden fees class action lawsuit, Farhi purchased four iPhones in June 2015 for personal and family use. Farhi entered into a device agreement with WebBank, borrowing a total of about $2,600 for the phones, payable in 24 monthly installments. WebBank immediately assigned its rights to T-Mobile, which claimed that no changes would be made to the terms of the loan. Farhi also entered into a month-to-month service agreement with T-Mobile.

Farhi cancelled his service after about two months because he was not satisfied with the cell phone service. T-Mobile subsequently sent him a letter seeking a payment of $2,271.52, the entire amount owed under the device agreement. Farhi never agreed to this accelerated payment plan, and asserts in the class action lawsuit that T-Mobile is leveraging the device agreement to “essentially penalize” Farhi for terminating his service agreement.

The T-Mobile class action lawsuit was filed on behalf of Farhi and a proposed Class of Florida residents from whom T-Mobile attempted to collect an accelerated amount due under an equipment installment plan loan agreement that was not actually owed.

Farhi is represented by James. L. Kauffman of Bailey & Glasser LLP and J. Dennis Card Jr. and Darren Newhart of Hicks Motto & Erlich PA.

The T-Mobile Hidden Fees Class Action Lawsuit is Moshe Farhi, et al. v. T-Mobile USA Inc., Case No. 9:16-cv-80580, in the U.S. District Court for the Southern District of Florida.