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Wednesday, October 19th, 2022 4:55 PM

Trading In? Read the Fine Print!

I think why everyone is having an issue with this business strategy is because of the verbiage and the appearance of promotional item. In many promotional advertisements they merely say get a certain "Dollar" amount off w/ an eligible trade in. The focus is on the trade in not the duration and the spread of the loan.

ATT Promo Example 1 ($800 off)

ATT Promo Example 2 ($800 off)

At face value, it looks like an grandiose cash offer for your asset in order to earn your business, quite similarly to many other types of loans (ie car loans). However, you aren't getting dollars per se for your asset. A more accurate assessment of what is actual happening is as follows:

-Relinquish your asset and transfer its ownership to AT&T.

-This will activate the POTENTIAL  AT&T Credit Utility Tokens that has a VALUE (at max) of $800.

-The Credit Utility Tokens is still the property of AT&T  and is contingent on the type of cellphone plan (i.e. unlimited) and the active maintaining of the 36 month loan. 


- The Credit Utility Tokens will be confiscated and voided if you try to pay off your debt early;  If you do, you are then required to pay the full remaining balance of the phone.

So, not only does AT&T now have ownership of your asset, but they also have ownership of the "credits" they are giving you for said asset. Imagine if that business model happened in the auto industry.  The dealership owns your trade in and they own the cash value of the said trade in as well. There would be mayhem. I've never heard of a loan that penalizes you for paying off your debt early. This is new to me and quite frankly that is quite a peculiar business model. You are not getting dollars for your asset. You are activating, for all intents and purposes, a token that is owned by ATT. The reason why I say token is because what you are receiving doesn't actually have any value outside of its domain of strict contingencies.  Just like a Chuck E Cheese token, the credit/token is owned by the Company, it is activated or transferred to the user by the user giving up some type of real asset (cash at chuck e cheese, phone at ATT) and the token/credit becomes worthless outside of its four walls. I understand AT&T is trying to increase the switching cost in such an aggressive market but it appears to be slightly misleading.

From my personal experience, I, like many other people, misunderstood the nature of the promotion.  I went to ATT to get my wife the new iPhone 14 pro max.  I asked the associate directly "...if I traded in our previous phone can I pay off the remaining $300 balance next month that is being spread out for 36 month"? He said "of course, you can pay off the remaining balance of your phone and that will in result make your bill cheaper each month since you will only pay for the plan. He completely omitted the fact that the promotional credit of $800 would be voided. He also underhandedly was talking about a different remaining balance.  Now hindsight being 2020 he clearly appeared to be talking about the remaining balance of the ENTIRE phone not the remaining balance after promotion; yet he confirmed my question as if we were in agreement and talking about the same thing (the promotional remaining balance). That is DECEPTIVE. You can scream "but the fine print!" all you want, but two things to keep in mind, not everyone buys phones online  and not everyone is privy to the unorthodox structure of the loan spread of phone carriers. If a potential customer is asking a clarifying question why not be upfront and honest about the potential consequences? Why frame it in a way that it appears you are agreeing with me and/or are confirming my inquiry? Are you that starved for customers? Are you not confident in your own service and the superiority of your cellphone towers? Again, I get it. The market is aggressive and the switch cost is relatively low.  However, superior customer service reigns supreme in any business.  If customers are treated well they will be loyal to you. This has been studied in multiple different business industries. If a business has this in tandem with superior product then the company will thrive and win. But if  customers feel cheated, played, misinformed, duped, trapped, "fine printed" they will leave and hate your company out of spite and might even try to compete against you. Its better to have no customer at all than an angry one.

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