Kevin HerreraDaily Press Staff Writer
SUNSET PARK A Santa Monica-based consumer watchdog is suing Cingular, now AT&T Mobility, for allegedly engaging in false and misleading advertising when offering rebates on cell phones.
The Foundation for Taxpayer and Consumer Rights is suing the wireless giant on behalf of consumers in California who purchased cell phones with the belief that they would receive a rebate check. But instead of getting cash, purchasers received a “VISA Reward” debit card that had numerous restrictions, according to the suit.
A federal court ruled last week that the suit can proceed. In May, Cingular/AT&T asked the federal court to dismiss the suit, arguing that consumers were not harmed or misled and that California’s consumer protection laws do not prevent the company from engaging in the practice of offering rebates.
The court’s ruling states: “The court finds that a reasonable consumer, upon seeing an advertisement that promises a ‘rebate’ of a certain amount, would generally understand that advertisement to mean that the amount will be returned to the consumer in cash, check or its equivalent …”
Harvey Rosenfield, one of the attorneys for the foundation, said consumers did not find out about the restrictions attached to the debit cards until it was too late to cancel Cingular’s wireless service without paying an early termination fee of $175.
The cards could only be used in certain places and had to be activated through Cingular’s Web site or by telephone before any money could be retrieved. Rewards cards can also incur service charges and expire within 120 days from the date of issuance, the suit states.
“In their intense marketing for cellular services, cell phone companies make price the paramount focus,” Rosenfield said. “Cingular told consumers that they would ultimately pay a discounted price, once the rebate was received. In some cases, consumers were led to believe the phone would be ‘free’ — that it would end up costing them nothing after the rebate.
“But instead of getting money back, consumers get a VISA Reward card,” he added. “Purchasers never got the promised discount. None of this was made clear to consumers. This deceitful practice hurts consumers and other cell phone companies that advertise honestly.”
Representatives from AT&T said the allegations in the suit are false.
“It is important to note that this ruling only allows the case to proceed and does not address the evidence in the case,” said Walt Sharp, spokesman for AT&T.
The foundation claims that Cingular/AT&T changed its advertising once the suit was filed, but is still misleading the public.
The lawsuit asks the court to order the company to stop the practice and to provide refunds to consumers.
The foundation is a non-profit, non-partisan citizen advocacy group that has brought several lawsuits on behalf of consumers challenging the practices, services and charges of wireless companies including T-Mobile and Nextel.
Research conducted by Vericours, Inc., a consulting company, showed that about 40 percent of rebate offers are never redeemed.
kevinh@smdp.com
