The City of New York is suing T-Mobile over what it described as “pervasive” and predatory sales tactics carried out by dozens of the company’s Metro locations, activity the city alleges was not only “abusive” but also illegal.
A complaint filed in the state Supreme Court in Manhattan and first reported by Reuters alleged that these sales practices were “rampant at Metro stores,” further claiming that T-Mobile and its subsidiary are liable for activity at 56 stores across the city that violated consumer protection law. Among the allegations, the complaint accuses the stores of selling used phones under the pretense that they were new, as well as for charging customers for unwanted services and enrolling them in pay plans without first obtaining their consent.
For example, Metro allegedly engages in a financing offering with a third-party company that allows customers to pay off their device in monthly installments. But the complaint states consumers can pay in excess of hundreds or even thousands of dollars over the phone’s sale price with this system.
The complaint cited one example of a woman who purchased a phone for $599 through a Metro dealer but was charged between $1,592 and $2,191 more than the advertised price. (The complaint further alleges that an employee misreported the phone’s purchase price as roughly twice its value in the financing contract, but states that even then the markup would have still been $1,041 more than the stated price).
“With this scheme in place, Defendants have deceived NYC consumers about things as basic as the actual price of the phone to things as complicated as the terms of financing,” the complaint states.
In addition to fees, financing, and misrepresentations about whether a device is actually new, the complaint alleges that Metro also misleads customers about its return policy. Namely, the complaint states that Metro’s advertised 30-day guarantee is “wholly illusory” because the company’s online website is set up to require customers to buy devices in-store but also has in place a seven-day return policy for in-person purchases.
The complaint claims that T-Mobile is responsible for at least 2,260 violations and is seeking $350 per incident, or $500 per offense if it was a knowing violation.
“We take these allegations very seriously and are continuing to investigate so we can respond to the City,” a spokesperson for T-Mobile told Gizmodo in a statement by email. “Though we can’t comment on the specific claims at this early stage, what we are seeing alleged here is completely at odds with the integrity of our team and the commitment they have to taking care of our customers every day.”
T-Mobile is currently also facing a multistate lawsuit attempting to thwart its merger with Sprint over antitrust concerns. Illinois Attorney General Kwame Raoul this week became the 17th attorney general to join the lawsuit. In a statement this week, New York Attorney General Letitia James called the merger “bad for consumers, bad for workers, and bad for innovation.”