The National Advertising Division (NAD), a division within BBB National Programs, told Verizon over the summer to cut it out with the misleading 5G ads, and now it’s telling T-Mobile to do the same. Add that to the fact that the Federal Communications Commission just fined T-Mobile $200 million for its abuse of Sprint’s Lifeline program for low-income consumers—the largest fine to be paid in commission history, according to the FCC—and T-Mobile is having a no good, very bad week indeed.
The NAD’s investigation of T-Mobile’s 5G claims, reported by Android Police, concluded yesterday. While the NAD found that some of the carrier’s post-Sprint merger claims had merit, like T-Mobile’s assertion that it will build the nation’s largest 5G network due to the merger, it asked the carrier to change the language of some of its other misleading claims.
Specifically, the NAD took issue with T-Mobile telling consumers they will get the best 5G network. NAD said that consumers could “reasonably interpret” these claims to mean T-Mobile currently provides the best 5G network and that T-Mobile customers will “imminently” have 5G coverage when that’s not currently the case.
“NAD determined that the challenged advertisements did not reasonably convey a present-tense message that the aspirational future benefits from T-Mobile are presently available to consumers,” the group said. “NAD recommended that the challenged advertising be modified to avoid conveying such messages.”
5G promises to change the way we use the internet, from the speed of our smartphones to the way self-driving cars interact with city infrastructure. But its rollout has been overhyped and under-delivers, with unreliable speeds at best and massive gaps in coverage. It’s going to take a long time to cover the entire U.S. in lightning fast millimeter-wave or even the slightly less fast mid-band spectrum that will eventually comprise the bulk of 5G networks. But that hasn’t stopped telecoms from airing problematic ads claiming their 5G networks are better than they actually are.
One day before the NAD announced its findings, the FCC announced it reached a $200 million settlement with T-Mobile over what the FCC said was “Sprint’s compliance with the Commission’s rules regarding waste, fraud, and abuse in the Lifeline program for low-income consumers.”
Low-income consumers participating in the Lifeline program receive up to $9.25 monthly toward either their phone bill or internet bill. The FCC discovered that prior to the T-Mobile/Sprint merger, Sprint claimed 885,000 monthly subsidies for Lifeline subscribers even though those subscribers were not actually using the service.
The FCC has a “non-usage” rule that says a provider can only claim a customer as a Lifeline customer if they use the service at least once in 30 days. Providers who participate in the Lifeline program received a government reimbursement for passing that $9.25 savings to their customers, but obviously they should not receive that money if they have customers who don’t actually use the Lifeline program.
Ironically, the “no-usage” rule is supposed to prevent providers from doing just that, but because that $9.25 a month often results in customers not having to pay anything at all, sometimes customers don’t see a need to cancel their service even if they don’t use it, according to the FCC. What happens then, according to past FCC investigations, is providers have oversold Lifeline subscriptions and pocketed the money from the government even though they weren’t actually providing the discount program to those customers.
In addition to paying a $200 million fine, T-Mobile will have to enter into a compliance program to ensure it doesn’t happen again.
And as for its 5G promises, well, we’ll believe it when we see it. T-Mobile has promised to scale back its claims.
Correction 11/9/20 11:36 am ET: A previous version of this article implied that the NAD is a division of the BBB. NAD is a division within BBB National Programs, but an independent non-profit organization that split from the BBB in June of 2019. It is not connected to the BBB. We regret the error.