Consumer group wants CFPB probe of T-Mobile’s unethical sales practices, fraud

Watchdog group Change to Win Retail Initiatives (CtW) is calling on the Consumer Financial Protection Bureau (CFPB) to investigate T-Mobile’s high-pressure sales culture and how it incentivizes unethical practices that lead to fraud.

The CFPB complaint is based on a report, Under Pressure at the Un-Carrier: How hard-selling at T-Mobile hurts employees and customers, released last week. CtW’s research determines that overly-aggressive sales metrics and intense pressure at T-Mobile creates incentives which put customers at risk for fraudulent enrollment: unauthorized services, unrequested equipment, and additional “ghost” lines unknowingly added to their accounts.

“I compare what’s going on with our front end to Wells Fargo,” said one T-Mobile employee who asked to remain anonymous for fear of retaliation. “People are under pressure to do things they wouldn’t normally do.”

Sales associates described T-Mobile’s sales goals as “unrealistic” and “crazy.” For example, workers said that they are told to add the company’s JUMP! program (a phone insurance plan) to 80 percent of new devices sold. Many customers do not want to pay—or simply cannot afford—the $9-$12 dollars per month for insurance on each individual device.

CtW analyzed 35,000 consumer complaints to the Federal Trade Commission, surveyed 2,200 T-Mobile customers, polled nearly 500 employees and conducted in-depth interviews with 17 of them. Key findings include:

• Over 1-in-3 T-Mobile customers surveyed (36 percent) said they experienced an unauthorized charge on their bill. The most common issue, reported by 43.5 percent of these consumers, was enrollment in the company’s JUMP! program or other device insurance without consent.
   
• From 2013 to 2016, the FTC received a significantly higher ratio of complaints about fraudulent charges at T-Mobile than its competitors—43 percent higher than AT&T, 70 percent higher than Sprint and double the ratio of Verizon.
   
• 83 percent of T-Mobile employees surveyed by CtW said they feel pressure to add services to customers’ accounts without permission.

“These high-pressure practices are not the result of a few unprincipled sales people but stem from a culture that puts growth ahead of ethics,” said Michael Zucker, Director of Change to Win Retail Initiatives. “T-Mobile must reform how it sets and enforces its sales goals, as well as how it monitors consumer complaints. In the meantime, T-Mobile customers should be vigilant about the charges on their account, especially as the company pushes electronic billing.”

T-Mobile’s unethical sales practices could lead to trouble. “If these allegations are proved to be true, T-Mobile could not only face fines but also suffer damage to its reputation that could make it difficult to attract new customers,” Rachel Gunter at Market Realist wrote. “Given the intense competition in the US wireless market, subscribers have become sensitive to what they are getting from their service providers, and any sign of unethical marketing and misleading bills can spark mass defection.”

In the wake of the Wells Fargo fake account scandal, the CFPB recently issued new guidance regarding sales incentive programs’ “risks to consumers, especially when they create an unrealistic culture of high-pressure targets.” The agency has previously levied $120 million in fines against Verizon and Sprint for fraudulent enrollment practices.

For the past year, Change to Win Retail Initiatives has raised concerns about T-Mobile’s deceptive advertising and questionable debt collection practices. The group has a ten year history of advocating for worker and consumer protections and is a part of the 5.5 million member Change to Win labor federation.

Links:

Under Pressure at the Uncarrier: How Hard-Selling at T-Mobile Hurts Employees and Customers (Change to Win, Dec. 2016)

Aggressive sales goals pressure T-Mobile workers to sell unwanted services, labor group alleges (Washington Post, Dec. 16, 2016)

Questions about T-Mobile’s Sales Practice Could Hurt the Carrier (Market Realist, Jan. 3, 2016)

Detecting and Preventing Consumer Harm from Production Incentives (CFPB, Nov. 28, 2016)