The Big Apple is suing T-Mobile and alleges the third-largest U.S. mobile phone company scammed consumers with tactics like selling used phones as new and using deceptive return policies.
The lawsuit filed in state Supreme Court in Manhattan Wednesday follows a yearlong investigation alleging the company and more than 50 of its Metro by T-Mobile stores around New York City violated the city's consumer protection law thousands of times, according to a news release.
“Companies that blatantly scam New Yorkers must be held accountable,” Mayor Bill de Blasio said in statement. “We are doing everything in our power to make sure that T-Mobile ends these deceptive practices and that customers who were taken advantage of get the restitution they are owed.”
Metro by T-Mobile is the wireless carrier's prepaid phone brand and previously was known as MetroPCS.
T-Mobile test: Company will let you try its service for a month with your own phone and number – for free
Kickoff time: Verizon brings 5G connectivity to 13 NFL stadiums
In an email, T-Mobile said it was taking the allegations "very seriously" but couldn't comment on the specific claims. The company said the accusations are "completely at odds with the integrity" of its team and the commitment they have to taking care of its customers.
The city said in its news release that it wants T-Mobile to "stop all illegal activity, to forfeit the revenue gained from the deceptive practices so that the court can create a restitution fund for victims," pay penalties and to notify credit bureaus that the financing contracts were fraudulent.
What the lawsuit alleges
According to the city's lawsuit, T-Mobile’s deception practices include:
• Tricking customers into buying used phones. The city says it “received a stream of complaints from consumers who paid hundreds of dollars for new phones but were unknowingly sold used phones.”
• Deceiving customers about financing. The city alleges the terms of contracts “typically add hundreds of dollars to the advertised price.”
• Charging consumers illegal taxes, mystery fees, and fees for unwanted services.
• Deceptive return policy. The city said T-Mobile’s return policy is misrepresented on the Metro-branded website and claims phones have a “30 day guarantee,” while the fine print says phones bought in-store must be returned within seven days.
Just briefly Brand-friendly: “The U.S. Open is evolving, and becoming more brand-friendly, by design,” Ad Age’s Brian Braiker writes. It’s got 21 official sponsors, including Emirates Airlines, J.P. Morgan Chase/Chase Bank and American Express. That’s up from 19 last year. And there are plenty of brands in the concession stands too; Grey Goose is selling something called a Frozen Honey Deuce for $20.
New job: General Motors has named Cadillac marketing chief Deborah Wahl as its global chief marketing officer, “a position that hasn't been filled since 2012,” Automotive News reports. Wahl previously spent three years as CMO of McDonald's USA.
Quote of the day: The Interactive Advertising Bureau’s Tech Lab doesn’t expect Apple to support its efforts to create new standards for tracking internet users. “They historically have shown that they don’t play well with others,” the IAB Tech Lab’s Jordan Mitchell says. Read more by Ad Age’s George P. Slefo.
Ad of the day: If you’re a fan of “Rudy,” the feel-good football movie from 1993, you’ll be happy to know that it’s getting a mini-sequel, courtesy of KFC and Wieden & Kennedy. As Ad Age’s Jessica Wohl reports, actor Sean Astin reprises the role of the title character in a KFC commercial, but he’s simultaneously playing Colonel Sanders. If you think it sounds wacko, you’re correct. Just watch it.
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WASHINGTON—State attorneys general are formally launching separate antitrust probes into
Facebook Inc.
FB 2.01%
and
Alphabet Inc.
GOOG 2.54%
’s Google unit starting next week, according to people familiar with the matter, putting added pressure on tech giants already under federal scrutiny.
The Google probe is expected to be announced at a news conference outside the U.S. Supreme Court on Monday, with a bipartisan group of about three dozen state attorneys general joining the effort, the people said.
The investigation will be led by Texas Attorney General
Ken Paxton,
a Republican, the people said. The attorneys general will examine the impact of Google on digital advertising markets, this person said, as well as potential harms to consumers from their information and ad choices being concentrated in one company.
Share Your Thoughts
Would you support a joint antitrust investigation of major tech firms? Why or why not? Join the conversation below.
Separately, an overlapping bipartisan group of attorneys general led by New York Attorney General Letitia James, a Democrat, is organizing a probe into social media company Facebook, according to these people.
“We continue to engage in bipartisan conversations about the unchecked power of large tech companies,” Ms. James said in a statement to the The Wall Street Journal when asked for comment on the probe. “The attorneys general involved have concerns over the control of personal data by large tech companies and will hold them accountable for anticompetitive practices that endanger privacy and consumer data.”
Facebook recently agreed to shell out $5 billion to settle Federal Trade Commission allegations that it repeatedly used deceptive disclosures and account settings to lure users into sharing personal information, and remains under federal scrutiny for issues including whether it acquired companies such as Instagram to stave off competition.
Texas Attorney General Ken Paxton will lead the investigation into Google.
Photo:
Tony Gutierrez/Associated Press
Facebook declined to comment.
Google, which is facing a Justice Department antitrust probe, said it is cooperating with the inquiries.
“Google’s services help people every day, create more choice for consumers, and support thousands of jobs and small businesses across the country,” said Google spokesman Jose Castañeda. “We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector.”
The action by the attorneys general, which has been anticipated for weeks, could possibly be expanded to other companies beyond Google and Facebook, some of the people said.
Public opinion polls suggest Americans are increasingly growing disenchanted with tech companies, in particular social media platforms, even as they remain hooked on their services.
One of the main concerns among regulators, lawmakers and state attorneys general is the dominant role a handful of big tech companies have in commerce and communications.
New York Attorney General Letitia James is organizing the probe into Facebook.
Photo:
Mary Altaffer/Associated Press
“The extreme concentration in the technology industry is bad for the consumer, and in our opinion it’s bad for America,” Tennessee Attorney General Herbert Slatery III said at a June hearing on antitrust concerns in the tech industry, flanked by two other state attorneys general. “The concentration has stifled innovation with market distortions [in] research and development, as entrepreneurs avoid competing with Google and Facebook and other tech giants. So we need to do something about that.”
For now, it appears unlikely the state and federal investigations will be formally coordinated. But the federal enforcers have been meeting with state attorneys general, and closer cooperation could develop as the probes move forward.
“The FTC values our cooperative relationship with the AGs and routinely coordinates on tech and antitrust issues,” a spokeswoman for the FTC said.
The Justice Department didn’t immediately respond to a request for comment.
The participation of so many attorneys general of both parties in the probe is potentially worrisome for the big tech companies. About 20 attorneys general were involved in the federal government’s last major tech antitrust case, against
Microsoft Corp.
, two decades ago.
Microsoft eventually agreed to an array of conditions in that case, including making the Windows platform more accessible to third-party software developers.
At a minimum, the attorneys general’s involvement this time is sure to add complexity and cost for the companies. For instance, the state attorneys are often able to extract large fines in antitrust cases, in circumstances where federal enforcers can’t.
The involvement of the attorneys general also lends a bipartisan gravitas to the antitrust probes, making it harder for the companies to attack them as politically motivated.
At the same time, the state attorneys will face the challenge of coordinating complex investigations among so many offices. Some attorney general offices, particularly in smaller states, also lack the personnel and resources to throw into the demanding job.
The Department of Justice is investigating the U.S.'s largest tech firms for allegedly monopolistic behavior. Roughly 20 years ago, a similar case threatened to destabilize Microsoft. WSJ explains.
Iowa officers are clearing the air on gun laws after Walmart asked customers to no longer openly carry firearms in its stores. Law enforcement officials say if a ...
Fed Chairman Jerome Powell will update the public on his outlook in a discussion Friday with the head of the Swiss National Bank.
Photo:
sarah silbiger/Reuters
Federal Reserve officials are gearing up to reduce interest rates at their next policy meeting in two weeks, most likely by a quarter-percentage point, as the trade war between the U.S. and China darkens the global economic outlook.
The idea of an aggressive half-point cut to battle the slowdown hasn’t gained much support inside the central bank, according to interviews with officials and their public speeches.
While market-determined interest rates have tumbled, signaling a dimmer outlook for growth and inflation, many Fed officials believe that the 10-year U.S. expansion can continue at a modest pace and inflation will gradually rise to their 2% target.
“The economy is in a good place, but not without risk and uncertainty,” said New York Fed President
John Williams
in a speech Wednesday. “Our role is to navigate a complex and at times ambiguous outlook to keep the economy growing and strong.”
An important update on the labor market Friday, plus new readings on retail sales and inflation next week, could reshape officials’ outlook. Fed Chairman
Jerome Powell
will also update the public on his outlook in a discussion Friday with the head of the Swiss National Bank.
SHARE YOUR THOUGHTS
At this point, do you think the Federal Reserve should cut rates? Why or why not? Join the conversation below.
Markets already expect the Fed to cut interest rates modestly at the Sept. 17-18 policy meeting. Investors place a 90% probability on a quarter-percentage-point rate cut and a 10% probability on a larger, half-point cut, according to CME Group.
Mr. Williams, a top lieutenant to Mr. Powell, didn’t push back against those expectations in his speech. Increased uncertainty, he said, called for “vigilance and flexibility.”
Mr. Powell cited weaker global growth, trade uncertainty and muted inflation when he led his colleagues in July to cut interest rates to their current range between 2% and 2.25%. He called the move a midcycle adjustment, adding that it wasn’t necessarily the start of a “long cutting cycle.”
The global growth and trade outlook has deteriorated since July. U.S. government bond yields dropped sharply after President Trump’s decision to increase tariffs on Chinese imports last month. Beijing responded with retaliatory measures, prompting Mr. Trump to announce further increases in tariffs.
Yields on the 10-year Treasury note, which stood at 2.02% after the Fed announced its rate cut on July 31, have fallen to 1.46%, while yields on the two-year Treasury note have dropped to 1.44% from 1.89%.
Global manufacturing data have been soft, and revisions to U.S. economic output and employment data suggested the economy is on a slower track than previously thought.
Officials are set to release new economic and interest-rate projections at the meeting. Officials have stressed that shifts in economic conditions will guide policy changes, meaning they are likely to be open to more stimulus after the next rate cut—just as they were in their postmeeting statement in July.
Mr. Powell has weathered unusual and sustained criticism from Mr. Trump for not moving more aggressively to lower rates. The president last month suggested the central bank leader was a bigger enemy to the U.S. than Chinese President
Xi Jinping.
The Fed chief is weighing mixed advice inside his own institution.
In July, several regional Fed bank presidents were reluctant to cut rates at all, and two formally dissented against the decision.
St. Louis Fed President
James Bullard,
on the other hand, wants the Fed to move rates down more aggressively with a half-point move.
“We have seen a big inter-meeting move in bonds. Markets are expecting a lot less inflation and a lot less growth than the Fed is,” said Mr. Bullard in an interview Wednesday.
“We should take some signal” from bond markets that indicate “our rate is too high,” he said. “I’m nervous that our policy rate is above every other rate. It is not a good place for the Fed to be.”
Because markets have largely priced in an additional quarter-point cut at the Fed’s meeting in late October, Mr. Bullard said he saw little reason to delay, if officials concur with investors’ dimmer growth outlook. “Why not just align that now?” he asked.
Other officials have said the Fed shouldn’t overreact to market signals absent stronger evidence that weakness from the global economy or the manufacturing sector is spreading to the services sector or consumer spending.
Risks facing the U.S. economy are elevated, and it would be appropriate to cut rates aggressively if those risks become reality, said Boston Fed President
Eric Rosengren
in a speech Tuesday.
Federal Reserve chairman Jerome Powell is facing fears of an economic downturn, volatile markets and criticism from President Trump. WSJ's Nick Timiraos explains what pressures weighed on the Fed chief as he headed to this year's annual central bank conference in Jackson Hole, Wyo. Photo: DAVID PAUL MORRIS/BLOOMBERG NEWS
“To date, these elevated risks have not become reality—at least not for the U.S. economy,” said Mr. Rosengren, who was one of the two regional bank presidents who dissented against the July decision to cut rates.
Many analysts see economic output growing at a rate a little above 2% in the third quarter.
Dallas Fed President
Robert Kaplan,
in an August interview, said broad declines in market-determined rates suggested the Fed’s policy stance might be too tight but cautioned against overreacting to those signals by making a half-point cut.
“Monetary policy, in my judgment, did not cause this,” said Mr. Kaplan.
Officials have said the trade fight is complicating policy because it involves making assumptions about hard-to-predict geopolitical risks.
Though there is an argument for the Fed to move aggressively to fight any economic slowdown risk quickly, Mr. Kaplan said the fast-changing trade landscape instead makes him cautious.
“When you have this amount of uncertainty and this frequency of changes, my reaction as a business person is not to speed up—it’s actually a little bit to slow down the cadence of it and maybe take a little bit more time,” said Mr. Kaplan.
Even those who have pushed for more-aggressive moves concede there are limits to how much the Fed may be able to stimulate an economy suffering from weaker business investment related to trade uncertainty.
“Monetary policy is a poor tool to undo the harm of trade war,” said Minneapolis Fed President
Neel Kashkari
in public remarks Wednesday, though he said officials needed to be ready to use that tool anyway.
TOKYO (Kyodo) -- Former Nissan Motor Co. Chairman Carlos Ghosn's first court hearing will take place as early as March, his lawyer said Thursday.
Ghosn was arrested last November and is facing a trial for allegedly underreporting his remuneration and diverting company funds to an investment firm he effectively owns.
