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US seeks to limit cell contract cancel fees

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.



By Electronista Staff
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  1. Herod

    Fresh-Faced Recruit

    Joined: Jun 2007

    0

    quick

    reach iin to your deep pockets verizon, and start sprinkling money to the law makers!

    this would be too fair for the consumer. we cant have this happen!

  1. jameshays

    Fresh-Faced Recruit

    Joined: Mar 2003

    0

    It isn't fair

    As much as I hate early termination fees and my lack of an ability to negotiate with my provider, this is no place for the government. At least not an American government. Consumers vote everyday with their dollars. We don't have to have a cell phone. We are not forced into a contract with any company. Each person who has a cell phone has willingly accepted those their terms. If they offer what I need and I am willing to accept their terms, I engage in a contract with them. If you want better terms, go somewhere else. Apparently, there are enough other people will to accept the terms that their business isn't hurting too much.

  1. jameshays

    Fresh-Faced Recruit

    Joined: Mar 2003

    0

    One more point

    If you don't like the terms, do a pay as you go phone. There are plenty of options out there...

  1. vasic

    Fresh-Faced Recruit

    Joined: May 2005

    0

    conservative thinking...

    "Don't regulate!"... Well, big business has its own agenda and very often is capable of creating a market where choices are limited. If you need a cellphone for whatever reason (work, security, personal reasons), you now have few choices. Wireless carriers have, through mergers and consolidation, created an oligopoly which can control services, terms and pricing beyond what a free marketplace

  1. vasic

    Fresh-Faced Recruit

    Joined: May 2005

    0

    truncated again!!!

    and now I can't remember what I wrote in my post...

    Wireless carriers have practically identical pricing and plans. Any semblence of competition between them is an illusion.

    This control over the market won't stop until there is strong legislative action. In addition, appearance of Apple on the scene will help. It is about time this happened.

  1. dmsimmer

    Fresh-Faced Recruit

    Joined: Feb 2005

    0

    Conservative breathing

    I'm constantly amazed at people who believe corporations act responsibly.

    You can hate government, and I can hate facism.

    The difference is, in my world, we are equal. In the "free" market world, liberty depends on how much money one has.

    Follow the lead paint...

  1. DarkVader

    Fresh-Faced Recruit

    Joined: Sep 2001

    0

    Amazing.

    It's unreal. People actually think this isn't somewhere the government needs to be. There are quite a few places government doesn't belong, but regulating business isn't one of them. This is EXACTLY what governments SHOULD exist for, to control powerful business interests in favor of the individual.

    The government is supposed to exist for we the people, not they the corporations.

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