The City of New York is suing T-Mobile US, alleging that it is unfairly exploiting people with its "Metro by T-Mobile" brand – its no-contract, pre-pay service.
Aimed at less wealthy people who are still in need of mobile phones, Metro promised they would no longer have to rely on "subpar devices, service and coverage".
But according to the legal complaint (PDF): "Unfortunately for Metro consumers, T-Mobile's management of Metro ensured that 'subpar' was exactly what consumers received – only now with the veneer of name-brand dependability."
The city alleges Metro engaged in abusive sales tactics including selling second-hand phones as brand new devices, and – partnering with third parties also named in the complaint – signing people up for expensive finance arrangements including pricey leasing agreements without their consent and advertising misleading guarantee statements on its website.
The case accuses 56 stores in all five New York boroughs of illegal activity and holds both T-Mobile US and MetroPCS responsible for staff actions. The complaint alleges that consumers' losses were substantial – it claims to have identified 21 second-hand iPhones which were sold for several hundred dollars each.
New York also claimed T-Mobe charged taxes that appeared to be "made up", with colourful titles such as "device change taxes" and "device activation taxes". These charges were "in addition to an activation fee of $15", and accompanied a "failure to provide legal receipts," the complaint states.
The case has been brought by NYC's Department of Consumer Affairs and names T-Mobile US, MetroPCS New York and other defendants.
NYC is demanding T-Mob hand over all its gains from the sales and establish a fund to repay New Yorkers if the court finds in its favour, plus impose civil fines for all violations.
It has asked for a jury trial.
The complaint could have come at a better time for T-Mobile US, which is still trying to persuade New York, California and eight other states – in federal court – that they should approve the cellular telco's proposed takeover of Sprint.
New York's Attorney General Letitia James gave good quote on the deal: "This is exactly the sort of consumer-harming, job-killing mega-merger our antitrust laws were designed to prevent."
Federal Communications Commission chief Ajit Pai has already agreed the $26bn merger should go ahead saying he believed the companies' promise to rapidly set up 5G networks and improve rural access. ®