FCC may regulate cell contract early termination fees
When Ryan Hasson wanted to add text messaging to his two-year contract with Sprint, he didn’t expect it to cost him about $100 in termination fees.
“I wanted to change my plan to add text messaging,” said Hasson, a nutritional sciences and physiology senior. “To do that I had to cancel the existing contract I was in. It ended up costing me a good amount.”
The Federal Communications Commission is currently considering a proposal that would allow customers to cancel their plan without fees within 30 days of signing the contract or up to 10 days after they receive the first bill.
Verizon Wireless, the nation’s No. 2 cell phone company, proposed the plan, which would cut cancellation costs while exempting cell phone companies from being sued by their customers. Wireless companies regularly charge customers at least $175 to end service early. The companies said cancellation fees are needed to cope with the cost of cell phones and signing new customers.
“We have been listening to our customers and we have already reduced our fees,” said Verizon Wireless spokesperson David Clevenger. “My guess is (the proposal) would be in line with what we’re already doing.”
The plan would not abolish cancellation fees altogether, nor refund fees for customers who have previously paid them.
On Friday, FCC Chairman Kevin Martin said he supports government regulation of early termination fees despite the effect that might have on current court cases. The proposal would require cell phone companies to decrease those fees over time on each contract.
Lansing resident Lindsey Odle, 28, said she was on a four-and-a-half-year cell phone contract before canceling.
“I moved here from North Carolina,” she said. “They continued the service of my phone, and my mom and I had to pay about $450 to get out of the contract.”
Despite her calls, the wireless provider charged her $200 to end service
But consumer groups, like Consumers Union, say the proposal would strip states of their ability to control the fees.
AARP, co-counsel in litigation challenging the fees, said it has not been part of any negotiations with the wireless industry, has not seen a proposal and is opposed to any deal that would remove state authority over fees.
“It’s just a bad idea to remove state enforcement in areas that have historically been left to states to regulate when there are not adequate federal enforcement and protections in place,” said Jim Dau, AARP’s senior manager of media relations.
Staff writer Nico Rubello contributed to this report.
Published on Monday, May 26, 2008
Comments
jason
05/27/08 @ 3:32am
Hmm I always hated those contracts
Kevin
05/27/08 @ 9:50am
All Cancellation fees should be illegal. Rich owners getting rich on OUR PAIN. Please put a stop to it !!!!!
Debbie
05/27/08 @ 12:54pm
Boo hoo. I don’t think anyone from the government should regulate this issue as it is a breach of contract issue. You signed a contract. A contract that stated you would pay for certain services for a certain length of time. If you don’t like it, you should have to pay to break that contract. You don’t NEED text messaging or fancier features, you WANT them. There is a big difference. So quit your bitching.
Salvatore
05/27/08 @ 2:04pm
It isn’t a matter of rich people or evil corporations. It’s just capitalism and the free market. Face it, if you signed a contract, you’ve made an agreement. However, if a cell phone provider really needed an extra $200 for the overhead of closing your account, then there would be a $200 end-of-service fee at the end of your contract period. Now I don’t know if any providers actually have that fee at the end of a contract period, but even if they did, I would bet that the main motive for having that fee was to discourage customers from going to other providers. But that’s just speculation. The bottom line is that the fee is there, and I am against these fees because they restrict the effectiveness of our free-market capitalist economy. We should have regulations in place that keep these ‘fake’ motivators out of the system and maintain that it is only the quality of the product or service a company provides that makes it successful and motivates it’s customers to stay. Only when that exact ideal is met can our capitalist economy actually work to it’s fullest, forcing companies to compete with their products and inevitably enhancing our standard of living. People have to be free to move to another provider without hesitation or regret when their provider’s quality is no longer acceptable. Otherwise it may take a provider years to figure out that something is going wrong and that they need to work on the quality of their product (which is exactly what’s happening nowadays). It’s things like this fee that restrict the flow of our economy, that keep our American companies from creating the quality products they are totally capable of, and that keep our economy from reaching it’s fullest potential.
Steve
05/27/08 @ 9:08pm
FCC involvement is never a good thing.
Shady
05/27/08 @ 10:03pm
So the FCC won’t let me be
or let me be me, so let me see
They try to shut me down on MTV
But it feels so empty, without me
kris
06/02/08 @ 5:06pm
Let them pay back all the terminations fees! It was a ripoff from the beginning. They will still be in business the day after.