WASHINGTON-The New York City Department of Consumer Affairs Thursday brought a lawsuit in state court against Nextel Communications Inc., Sprint Corp. and T-Mobile USA Inc. for allegedly deceiving consumers in advertising of cell-phone equipment and services.
The lawsuit was filed July 21 in New York Supreme Court.
“You can’t promise a great deal in the headline and hide the true costs in the fine print,” said Jonathan Mintz, DCA acting commissioner. “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. While clamoring for competitive consumer attention, these major cell-phone companies crossed the clear line between promotional gimmicks and deceptive advertising. It doesn’t matter whether the business is selling cars, tax services, or cell phones, everyone has to follow the same rules.”
The DCA said it pursued claims against AT&T Wireless Services Inc. (subsequently purchased by Cingular Wireless L.L.C), Cingular Wireless and Verizon Wireless for deceptive advertising. However, the DCA said those carriers settled and agreed to fully comply with the New York City Consumer Protection Law in their marketing.
“Verizon led the industry in committing to comply with the Consumer Protection Law and settling claims, and we are pleased that others followed,” said Mintz.
The New York City Consumer Protection Law broadly defines deceptive and unfair trade practices, among other things, by requiring the type size used in print ads to be clear and conspicuous to readers. It prohibits practices that have the capacity, tendency or effect of deceiving or misleading consumers, according to the DCA.
“This rule, as applied to Nextel, is overbroad and violates Nextel’s right to free speech. The Department of Consumer Affairs has put Nextel in a position where it must defend its constitutional right to advertise in a truthful and straightforward manner, and Nextel is prepared to do so,” said Nextel in a statement. “Nextel’s manner of advertising entry-priced phones is truthful and straightforward, and that, if anything, the Department’s proposed alternative would make Nextel’s advertising confusing and not helpful to consumers.”
Sprint, awaiting expected approval from U.S. officials for it proposed $35 billion acquisition of Nextel, said it was disappointed the DCA opted for litigation.
“Sprint fully complies with federal, state and local regulations, and we had been negotiating in good faith with the department to resolve any of their concerns about our advertising. It’s unfortunate the department has chosen to take court action rather than to continue the negotiations,” said a Sprint spokeswoman.
T-Mobile USA did not reply to requests for comment.
