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The 'catch' in T-Mobile's iPhone plan


Washington state Attorney General Bob Ferguson isn't happy with T-Mobile's recently instituted plans to replace the traditional two-year contract for an iPhone with an installment plan. Ferguson's main beef with the magenta network? That although T-Mo tells customers on the new plan that they can cancel their service at any time, the company has not made it clear that customers have to pay the remaining cost of the phone if they cancel service.

TUAW has discussed the no-contract Simple Choice plans previously. A T-Mobile iPhone 5 can be purchased for a US$99.99 down payment plus $20 monthly payments for 24 months, or a customer can choose to purchase the phone outright for $579.99 (for a 16 GB iPhone 5). Only if a customer has paid for the phone up front can they just walk away from T-Mobile's plan without any form of cancellation fee.

Notification of the need to pay the "device loan balance" upon cancellation has been on the T-Mobile website since the first day of sales. Ferguson felt that the company wasn't making that stipulation clear enough in their advertising, and as you might be able to see in the image above, it was rather well-hidden in the fine print at the lower center of the store description.

Ferguson's complaint has had a positive impact on Bellevue, Wash.-based T-Mobile USA. The company has agreed to warn customers across the USA about the lump-sum phone purchase payments since they can end up being higher than the early termination fees charged by other carriers for cancellation. In addition, T-Mobile USA has agreed to issue full refunds upon request to any customer in the country who bought a phone from the carrier between March 26 and yesterday.

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