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iPhone Upgrades: Discount Downgrades

iPhoneAs people lined up to buy iPhones last Friday, some purchasers got less than they bargained for.

One consumer wrote to Mouse Print* saying he bought an iPhone for his fiancée to replace a more conventional phone on her existing AT&T plan. Besides paying $500, and based on material that was handed to him at the Apple store, he expected that her monthly cell bill would only rise by $20 to cover the cost of just adding a data plan.

From AT&T’s website:

Q. Do I need to switch to a different rate plan if I upgrade to iPhone?


A. If you’re an existing AT&T (formerly Cingular) wireless customer, you just need to add an iPhone Data Plan. (This may replace your current data plan. Your voice plan will stay the same) The iPhone Data Plan gives you Visual Voicemail, as well as Unlimited Data—includes both email and web—and texting, all for as little as $20. You’ll add an iPhone Data Plan and sign a new 2-year service contract during the activation process. Discount eligibility for other devices will continue from the time of your most recent contract.

Everything seemed fine for the soon-to-be-groom until he went home to activate the phone via his computer. A notice came up that said “all discounts will be lost.”  This was troublesome since his fiancée had a 15% educational discount on the calling plan that all teachers in her state can have. Since the loss of the discount seemed contrary to his understanding from Apple and AT&T, he continued the activation process. After hours on the phone and back at the store, he learned the truth.

*MOUSE PRINT:

Q. Are business customers eligible for discounts?
A.
No. iPhone service is available only to consumer accounts. iPhone and associated wireless service are not eligible for corporate discounts. 

Apparently, her discount plan caused her account to be coded as a “business.”

The consumer said he was not given anything at the store to indicate he would lose the plan discount his girlfriend was receiving. Even the Apple site currently says “If you’re already an AT&T customer and want to keep your current voice plan, you can just add an iPhone Data Plan with unlimited data (email and web) and Visual Voicemail for just $20 per month.”

Worse news came when the consumer checked their refund policy:

*MOUSE PRINT: “You can return your iPhone within 14 days for a full refund, but there is a 10% restocking fee if the box has been opened.”

Our consumer is not alone in his iPhone woes. People on family plans through their employer, for example, cannot merely add an iPhone to their account. An entirely separate individual plan must be purchased, from outside the company, and without any corporate discounts. [See CNN Money story.]

All these consumers may have a good case for requiring Apple/AT&T to waive the restocking fee should they want to return their phone. Sellers generally are required to disclose key facts that might have induced prospective buyers not to make their purchase in the first place.

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Deal or No Deal: Surprise Texting Charges

Deal or No Deal smallDeal or No Deal is a big TV hit, but the millions of viewers who play their weekly “Lucky Case Game” may not be aware of all the charges associated it.

Four times during each program viewers are urged to grab their cellphones and text the number of the case (one through six) that has $10,000 or $20,000 hidden in it. One winner will be chosen by the end of the program from all those who guess the correct numbered case, and that person gets the cash prize.

*MOUSE PRINT:

“$.99 per text msg plus standard text messaging charges.Go to nbc.com/DOND to enter for free…”

Most people cannot read that disclosure because of its small size and the limited time it appears on the screen. So wouldn’t an oral disclosure of the price make sense and be fair? This show makes no such oral disclosure of the price in two out of the four times it promotes the sweepstakes.

In addition, there are additional charges that may wind up on your cell bill that are not disclosed during the TV program at all, and are only revealed in the official rules on the NBC website:

*MOUSE PRINT: 

“In addition, a premium text message charge of $.99 will apply to all text messages sent and received in connection with the Promotion. This charge will be billed on your wireless phone bill or deducted from your prepaid balance. You will receive a “thank you” text message that night including a DEAL OR NO DEAL Insider message. This message provides additional information about the Show, its host and/or products. The following day, you will receive a text message giving you the ability to opt-in to an SMS-based message program keeping you up to date on the latest cool Show information and more. You may stop receiving text messages at any time by responding “end”, “stop” or “quit” to any of the messages.”

So in addition to the 99¢ premium charge, your cell company will bill you for three separate text messages. The latter two are most likely promotional messages related to the show. For those without an unlimited texting plan, sending that one original text message will wind up costing anywhere from $1.14 to $1.44 (plus tax) depending on the price you are charged by your cell provider for text messaging. One can only hope that the 99¢ charge does not apply to each message “sent and received.” 

The public is spending a fortune on TV voting and games promotions. In fact, about $17 million was raked in by NBC on the Deal or No Deal “Lucky Case Game” just in the first three months of 2007. That one game accounts for nearly half the money spent in the US on all such premium texting promotions. [See story.]

But isn’t the Deal or No Deal game and other similar promotions tantamount to gambling?  You are paying a price for the chance of a prize, which is the definition of a “lottery” in most states, and most private companies are not allowed to conduct lotteries. Promotions like this are generally not considered lotteries if they offer a “no purchase necessary” means of playing the game. NBC does that, but in MrConsumer’s view, offering to play the game for free only via the Internet fails as a viable alternate means because one in four households do not have Internet access (and their only way to play is to pay via cellphone).

A similar text messaging promotion is currently being challenged in court in Georgia by a plaintiff who is claiming that the game on NBC’s Apprentice, “Get Rich with Trump” constituted an illegal lottery, even though it had a “no purchase necessary” means of entry. (See previous Mouse Print posting, and this newsletter [pdf].) 

Is it any surprise, then, that NBC now says their Deal or No Deal game is not open to residents of Georgia? 

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Embarq DSL Only $24.95: Your Price Until Pigs Fly*

Embarq 24.95 til pigs fly Isn’t it nice to finally find a company that doesn’t play pricing games with their Internet service?  So many ads offer a low come-on price for a short period, then the price goes up. That’s what one consumer thought who recently wrote to Consumer World.

Embarq, which is the local phone company spinoff from Sprint, is advertising a fixed price of $24.95 for high-speed Internet service, and says that it is “your price until pigs fly.” [website 1/13/07]  They also say “a price that won’t budge” … “for as long as you have the service.” 

The consumer decided to sign up because he could save money by cancelling his existing NetZero dial-up service, and even cancelling his local phone service since he had a cellphone. He could now get high-speed Internet for less than he was currently paying for slower service.

Of course, Mouse Print* would not be looking at this ad unless there was more to it than meets the (pig’s) eye.

*MOUSE PRINT:

Embarq details

pigs fly 2The fine print above indicates that the company can just cancel the service, which, obviously, would immediately extinguish the $24.95 “forever” price. In addition, their standard terms and conditions page has more fine print than a phonebook, yet seems to be currently missing detailed rules about their residential Internet service. In part it reiterates they can discontinue a service with 30 days notice, but makes no mention of the customer’s right to a fixed price for life. Also, since the fixed bargain DSL service price is linked to local phone service,  local phone service prices could easily go up with regulatory approval where required.

Unfortunately, the consumer did not read the fine print, and Embarq did not direct him to it by means of using an asterisk next to the price. He didn’t realize that the $24.95 price is only available as part of a package of telephone services, that he no longer has. He didn’t know they would add a $10 Internet access charge to his bill. And he didn’t realize to get out of this mess he would have to pay a $99 early termination fee.

There is no happy ending to this story, but a moral. You have to read the mouse print, and know that most phone companies do not sell “naked DSL.” Â