Featured Articles

5th Generation Broadwell 14nm family comes in three lines

5th Generation Broadwell 14nm family comes in three lines

Intel's 5th Core processor family, codenamed Broadwell, will launch in three lines for the mobile segment. We are talking about upcoming…

More...
Broadwell Chromebooks coming in late Q1 2015

Broadwell Chromebooks coming in late Q1 2015

Google's Chromebook OS should be updating automatically every six weeks, but Intel doesn't come close with its hardware refresh schedule.

More...
New round of Nexus phone rumour kicks off

New round of Nexus phone rumour kicks off

Rumours involving upcoming Nexus devices are nothing uncommon, but this year there is a fair bit of confusion, especially on the…

More...
Nvidia officially launches the 8-inch Shield Tablet

Nvidia officially launches the 8-inch Shield Tablet

As expected and reported earlier, Nvidia has now officially announced its newest Shield device, the new 8-inch Shield Tablet. While the…

More...
Aerocool Dead Silence reviewed

Aerocool Dead Silence reviewed

Aerocool is well known for its gamer cases with aggressive styling. However, the Dead Silence chassis offers consumers a new choice,…

More...
Frontpage Slideshow | Copyright © 2006-2010 orks, a business unit of Nuevvo Webware Ltd.
Thursday, 22 May 2008 06:51

Cell phone Contract Termination Fees to be reduced

Written by David Stellmack

Image

FCC offers help for consumers

The Associated Press has reported that the Federal Communications Commission (FCC) is negotiating with cell phone carriers to help eliminate costly early termination fees that are charged when a consumer cancels a contract with a U.S. wireless company.

Mobile phone companies frequently charge a termination penalty fee of $175 (and sometimes more) when consumers elect to terminate their service contracts with a mobile phone carrier. The FCC has crafted a proposal where the wireless carriers would allow consumers to cancel their service contract without a penalty during the first 30 days after they have entered into the service contract or up to 10 days from when they receive their initial cell phone bill.

The AP also reported that the FCC proposal caps termination fees and reduces them on a pro rata basis, based on the term of the initial contract and the length of the contract amount remaining. The FCC plan mitigates the severity of the termination fees, but does not eliminate them entirely, according to insiders wishing to remain anonymous. As a trade-off for the FCC proposal the cell phone carriers will be let “off the hook” for liability in State courts where they are being sued by angry consumers for billions of dollars.

The authority of the States to regulate such charges would be taken away. The wireless industry is worried about a number of long-running, class-action lawsuits in various State courts. One lawsuit against Sprint Nextel in California is in progress, and plaintiffs in a New York case sent to arbitration are asking for $1 billion in refunds.

Consumers who have been required to pay early termination fees have sounded off.  "It's ridiculous," said Ric Causey of Allen, Texas, who paid $600 in termination fees to Sprint on contracts for three cell phones after he canceled service because he complained of poor reception around Dallas, Texas.

He went on, "I understand the fine print, but I ended up paying $200 per phone just to switch service to another carrier. Causey said he complained, but got nowhere. He was afraid not to pay the fees because of the effect it might have on his credit rating.  "I never got any satisfaction," he said. "I figured I'd deal with it later, but I never got reimbursed."

Wireless companies argue that the cancellation fees are needed to help defray the cost of cell phones, which are actually paid for by customers entering into long-term service contracts. Consumer groups counter this, saying the fees are unreasonable and punitive and are really meant to discourage customers from switching wireless providers.

U.S. Senators, Amy Klobuchar, D-Minn., and Jay Rockefeller, D-W.Va., are co-sponsoring the "Cell Phone Consumer Empowerment Act," a bill that would require prorated fees and a 30-day window for customers to exit a contract. The wireless industry’s proposed response links termination fees to the actual costs incurred by the wireless carrier, but would require the fees to be prorated over the term of the contract. The proposal also would bar wireless companies from charging a termination fee for consumers who change the terms of their contract or simply end on contract period and enter into another.

Last modified on Thursday, 22 May 2008 09:51

David Stellmack

E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
blog comments powered by Disqus

 

Facebook activity

Latest Commented Articles

Recent Comments