NY: T-Mobile's Metro Stores Sold Used Phones as New to Consumers

T-Mobile's Metro stores in New York City have been allegedly selling used mobile phones to consumers as new products, and engaging in other deceptive practices, according to a lawsuit from local authorities.

More than 50 official and authorized "Metro by T-Mobile" dealers in the city were defrauding consumers through the illegal tactics, New York City's Department of Consumer and Worker Protection announced on Thursday.

After a year-long investigation, the city says it uncovered at least 21 instances of local Metro stores repackaging used handsets, including iPhones, and selling them as brand new to customers. "Some of the consumers retained their receipts, and those receipts show sales of between $600 and $900," the suit says.

Metro dealers allegedly also tricked some customers into believing they were buying their phones, when in reality, they were leasing. During the checkout process, dealers would secretly sign up the customer into an expensive financing contract that would add hundreds of dollars to the cost of the device.

"Metro stores deceive consumers about this financing, sometimes enrolling them without their knowledge by 'e-signing' the contracts form them on a screen. This misconduct leads to consumers' credit being ruined," city authorities said in yesterday's announcement.

In response to the lawsuit, T-Mobile told PCMag: "We take these allegations very seriously and are continuing to investigate so we can respond to the city. Though we can't comment on the specific claims at this early stage, what we are seeing alleged here is completely at odds with the integrity of our team and the commitment they have to taking care of our customers every day."

T-Mobile bought MetroPCS in 2013; the subsidiary specializes in prepaid, no-contract wireless services, which can appeal to customers with low credit scores. However, New York City investigators claim the Metro dealers were effectively preying on vulnerable consumers in need of an affordable wireless plan. Other illegal tactics include charging customers mystery fees and unwanted services.

Allegedly, Metro itself also misrepresented the company's return policy on its website, which claims a "30 day guarantee" for online purchases (above). However, city investigators claim the guarantee is essentially bogus because no phones can bought on the Metro site; instead, consumers have to purchase products in a physical store, where the return policy is actually seven days.

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The lawsuit says the misconduct has occurred over the last three years. Whether other Metro stores outside the city engaged in the same practices remains unknown. But the city's lawsuit is demanding T-Mobile stop the activities at the local stores and forfeit all revenue gained from the deceptive practices, which can then be redistributed back to the affected consumers.

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