Attorneys for New York City's Department of Consumer Affairs filed suit in Manhattan's State Supreme Court charging three carriers with deceptive advertising. Nextel Communications, Sprint Spectrum and T-Mobile USA, are charged under New York City's consumer protection law that bans an ad's fine print from undermining the offer in the headline.
Nextel was charged with deceiving consumers by headlining "all incoming calls are free," with a footnote indicating an additional 10¢ a minute fee under certain conditions. Sprint's offense is an ad stating: "Nationwide long distance included. Every minute. Every day" while a footnote said there was an additional 25¢ per minute fee for long distance. Another Sprint ad offered a free cell phone offer when in fact a two-year contract and two lines were required. T-Mobile was cited for a "free roaming" plan that noted call duration may be limited and roaming charges would be charged.
The law carries a maximum penalty of $500 per violation.The suit against Nextel, Sprint and T- Mobile was filed after those three failed to reach a settlement with the Department of Consumer Affairs. Three carriers did settle: Verizon Wireless, Cingular Wireless and AT&T Wireless (now owned by Cingular). Verizon Wireless settled for $30,000 while Cingular paid $95,000 for itself and AT&T Wireless.
But Nextel said there's more than money at stake. "New York has a local ordinance unlike any other," said spokesman Scott Sloat, noting the company has no plans to settle. "We believe all our advertising is truthful and straightforward and if we did what New York wanted our advertising would be more confusing for consumers."
Bryan Zidar, spokesman for T-Mobile, said "We don't comment on pending litigation." Sprint executives did not return calls by press time, but an executive with a carrier termed the lawsuit a "shakedown."
At the same time, a California consumer group has filed an official complaint with the state's Public Utilities Commission against two carriers, Sprint and Cingular, for cellphone spam. Unlike unwanted email messages, text messages opened over a cellphone usually cost the consumer about 10¢ each to open them.
"Cell phone customers should not be charged for ads sent to their phones by the carriers themselves, let alone any other advertiser," said Michael Shames, exec director of UCAN. "Regulators need to stop this new rip-off in its tracks."