updated 04:10 pm EDT, Mon September 17, 2007
Limit on Cell Cancel Fees
Consumer advocate groups today began supporting a new law put forth in the US Senate that could potentially reduce early contract termination fees or eliminate them altogether for some customers. Both the Consumers Federation of America and the Consumers Union have backed a move that would scrap the fees for any subscriber who quits their contract within 30 days of signing up, allowing customers to more easily back out of a poorly performing service without incurring a penalty. The measure would also prorate the fees after the 30-day period so that customers would not necessarily have to pay the full amount to exit a contract.
"Contract extensions and early termination fees are the #1 consumer annoyance with the wireless industry," said Consumer Union lawyer Chris Murray. "Consumers are powerless to negotiate better terms with their cell phone carrier, but this bill would help to level the playing field."
Put forth on September 7th by Democratic senators John Rockefeller and Amy Klobuchar, the law would also require carriers to more clearly outline the reasons behind fees on customer bills. The complete legislation has received stiff opposition from the Cellular Telecoms & Internet Association (CTIA), which includes a number of the major cellular service providers and argues that customers can switch to pre-paid service if they dislike contracts. Complaints from customers, however, have frequently centered around the smaller range of features and phones with pre-paid services.
The Senate bill has gained extra sensitivity in recent months due to the release of the iPhone, which requires that adopters sign a two-year contract with AT&T unless poor credit allows a pre-paid option. Customers attempting to switch from most other US providers have often been forced to pay termination fees over $100, and can be asked to pay full cancellation fees if they quit AT&T service at any time. Verizon is currently the only American cellular provider to pro-rate its cancellation fees.