Nextel, Sprint, T-Mobile Charged With Violating Consumer Protection Law

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SAN FRANCISCO ( -- New York's Department of Consumer Affairs is suing three wireless phone marketers for violating the city's consumer protection law.

Seeks maximum fine
Acting Commissioner Jonathan Mintz, in a suit filed in New York Supreme Court, charged Nextel

New York is seeking maximum fines against Sprint, T-Mobile and Nextel in a lawsuit that alleges deceptive advertising practices by the wireless carriers.
Communications, Sprint Spectrum and T-Mobile USA, with deceptive advertising and is seeking maximum fines as well as compliance with the city's consumer protection laws.

Under New York City's consumer protection law, the maximum fine is defined as $500 per count, with each count based on the newspaper's circulation the ad appeared in, the number of times an ad ran, or other parameters dependent on the court's rulings. The court has yet to determine how many counts each marketer faces.

In a statement, Mr. Mintz said, "You can't promise a great deal in the headline [of an ad] and hide the true costs in the fine print." He said the three carriers' advertising in local newspapers "crossed the clear line between promotional gimmicks and deceptive advertising."

Ads in local papers
The ads appeared in the New York Post, Newsday, Daily News and The New York Times. Nextel's ads, for example, said, "All Incoming Calls Are Free" but later in the ad came the disclosure of an "additional access charge of either $.10 per minute multiplied by the number of participants on the call ... or a monthly flat fee" for incoming calls.

"If a cell phone company promises free long distance, consumers should get free long distance -- period. Consumers rely on advertising as a shortcut through the often-confusing maze of wireless options and the City's law provides protection to ensure those ads are truthful," Mr. Mintz said.

The telecom sector is one of the nation's top advertising sectors, with the seven top cell phone providers spending a total of $4.7 billion in 2004, up from $4.1 billion in 2003.

Brian Zidar, a spokesman for T-Mobile, said, "We don't comment on pending litigation."

"We believe all our advertising is truthful and straightfoward," said Nextel spokesman Scott Sloat.

Making ads more confusing
One issue seems to be how much can be said in an ad. According to the agency, Nextel's ads state "Plans starting at $10 per month" or "powerful phones starting at $24.99" without "adequately disclosing either the highest price of the advertised plan, or an 'average price' as required by law." Mr. Sloat said if Nextel had complied with the city's regulations, "our advertising would be more confusing for consumers."

The city's consumer protection agency also has gone after AT&T Wireless, now part of Cingular Wireless, and Verizon Wireless on the same grounds, but those two carriers settled and agreed to change their marketing practices, the agency said. Cingular paid a $95,000 settlement, while Verizon paid $30,000.

San Diego group
The agency held its news conference the same week the San Diego-based Utility Consumers' Action Network filed a complaint with the California Public Utilities Commission over charges imposed by Sprint and Cingular Wireless over unsolicited text messages, ring tones or ads appearing on mobile phones.

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