Cingular Declares Your Legal Rights Waived

The latest Cingular bill includes a nice fat contract change clause declaring that by remaining a Cingular customer, you’ve waived your right to a trial by jury or participate in a class action lawsuit.

Coincidentally, this January bill also contains notice that Cingular is raising its text message rates from $.10 to $.15 per message, which we have posited constitutes a material change to your contract, and can be used to escape your contract without paying an early termination fee.

Cingular PR contacted us to tell us this was wrong. Outside commenters said that Cingular was basically daring customers to sue them for taking this position.

Now it looks like they want to prevent that possibility as well.

Copy of the “notice of improved arbitration agreement” inside…


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Curtis writes:

    “I’ve been a content Cingular customer (off and on) for a while (and only off when I wanted to try out a different network and device–biting the ETF because I knew I was jumping ship out of my own choice for gadget lust). I noticed the TXT price hike, and the unfortunate legal backlash from Cingular. But today, I got my bill in the mail from Cingular, and I noticed right when I opened the envelope, there in all CAPS on the first page of my bill:

    “NOTICE OF DISPUTE RESOLUTION AGREEMENT IN CONTACT”
    And just beneath this bold announcement in small text reads:
    “We are pleased to advise you that Cingular has revised the ARBITRATION CLAUSE in our standard Wireless Service Agreement to make it even better for consumers. The revised arbitration clause can be found at http://www.cingular.com/disputeresolution. This is effective immediately.”

    Normally I don’t get angry with bills unless there’s some absurd amount on there because a credit didn’t process, but this really boiled my blood. I haven’t called Cingular about it yet, but I wanted to submit this information to Consumerist and see if anyone else has gotten out of contract, but remained a Cingular customer. That’s what I’d like to do.

    See, I have little choice in the world of simultaneous data and voice: Cingular’s 3G network is my only choice so far (UMTS blah blah nerd), so I don’t mind being a customer, but I do mind being in a contract that forces me to give up certain rights as a consumer.

    I have seen some success posts on fatwallet and howardforums. I’ll probably be giving Cingular a ring tomorrow to ask about it gently at first…

    I also need to admit, I originally wanted my contract axed because I want my next phone on a discount, but I can’t accept an organization telling me what legal rights to give up.

    Regards,
    Curtis”

— BEN POPKEN

Comments

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  1. takerfan4 says:

    Well this about does it for me. My contract expires with Cingular next week, and it looks like so will the service with it. Three strikes, they’re out. First, that BS text messaging crap, the merger with Ma Bell, and now they want to change my legal rights. Screw them!

  2. timmus says:

    This seems like it’s a cannon shot aimed right at the money-saturated litigation industry. I wonder how they’ll react to a telco trying to take their bread and butter away.

  3. drowned_in_milk says:

    Does this violate a constitutional amendment though? Doens’t a fundamental right to trial by jury supersede some corporate contract; have they any right at all to say this?

  4. Chris says:

    First, people can, and do give up Constitutional rights by contract. It happens 500 times a day to every one of us. In exchange for keeping our jobs, we agree not to fully exercise our right to “free speech” about our boss. Arbitration clauses are not only legal, they are “preferred” by both state and federal law.

    And while I understand Curtis’ initial reaction, he is almost certainly better off under the new agreement tan the one he had yesterday. Cingular/AT&T have had arbitration clauses in their contracts forever – Curtis probably didn’t notice it when he signed the contract (or opened the shrink-wrap on his phone).

    As a lawyer who’s litigated lots of these arbitration clauses in the consumer context, the one above is very sweet for the consumer: Cingular pays the arbitrator’s fees; Cingular pays the customer’s attorney’s fees if he wins; the hearing takes place in the customer’s home county, not Cingular’s; and an unprecedented double-attorney’s-fee bounty for cases where the customer beat’s Cingular’s settlement offer.

    No doubt, a lot of these are in response to various pro-consumer court rulings in one jurisdiction or another (Cingular’s arb clause has been taking a beating in California), and to grease the skids for what Cingular is really looking trying to protect – the class action waiver – but for the individual consumer who has a dispute, it is quite possibly better than filing suit in “regular court.” [As always, consult your lawyer for real legal advice.]

  5. Okay, I must post this now.

    “There has grown up in the minds of certain groups in this country the notion that because a man or a corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary public interest. This strange doctrine is not supported by statute nor common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back, for their private benefit.” – ROBERT A. HEINLEIN

  6. Gabriel says:

    It’s true that people give up a lot of rights in contracts everyday but, in theory, if you go to court you will win because a clause that says you waver your constitutional rights in ultimately not valid. Any judge should rule that way but most people simply don’t have enough money, get scared or just don’t have the time and patience to go through the process so they settle and opt for solutions through arbitration. But if you have the time, sue their asses off just because they made you sign a contract that says you can’t sue and then sue them again for being assholes and trying to scam you even though you are their costumer and then sue them once more just for being pricks in general. That’s my advice.

  7. ratbastid says:

    Does this violate a constitutional amendment though? Doens’t a fundamental right to trial by jury supersede some corporate contract; have they any right at all to say this?

    That’s in the case of criminal trials. You have (well, had until a couple months ago: nowadays if it’s possible to call you an “enemy combatant”, all bets are off) the constitutional right to have your criminal charge tried publicly in front of a jury of your peers. Civil cases are entirely different. Civil cases go to arbitration all the time. And an arbitration agreement that includes waiving the right to sue in civil court is VERY common practice.

    There’s really nothing much to see here.

  8. AlwaysPonder says:

    Chris has the right of it.

    Yes – there has been a binding arbitration clause, that most of us (myself included) skipped when we first signed up for service.

    Yes – We are giving up our rights to class action suit.

    Personally I think that 10,000 arbitration cases spread out over the country at $125 a pop would do far more good for the individual consumer and be far more hassle to Cingular than a single class action suit.

  9. segfault, registered cat offender says:

    But, these arbitration clauses are part of a “form pad” contract, like the one when you buy a car, and I’d bet that every major wireless carrier has a similar arbitration clause. If so, the consumer has no meaningful choice to use a wireless carrier that doesn’t demand arbitration, and there’s a decent chance of getting a court to set aside the arbitration clause on those grounds.

  10. John Stracke says:

    Actually, Cingular’s position on the text messaging changes is pretty reasonable. Because text messaging is considered separate from the contract, that means both sides can change it. I found this out last month, when I wanted to switch to a different SMS package; they did it for me without any impact to my contract.

    Now, if they were claiming the right to change it themselves, but not letting us switch packages at will, that’d be wrong.

  11. viriiman says:

    $139 previous balance? Someone likes to talk a lot (compared to $46 this month)

  12. Ran Kailie says:

    I don’t see whats that odd about this. I didn’t read my full Cingular contract when I signed originally (shame on me), but I’ve had no problems since and I’m not longer even in contract anymore.

    But this really is a lot better then most clauses like this I’ve read, the old AT&T Wireless one was horribly stingy.

    What my question is though, for those of us customers who get online billing, will we receive any specific notification of this change beyond maybe a small notion on the electronic bill?

    My bill cycle isn’t till the 17th, so I won’t know till then I guess. As much as some of the recent Cingular stuff makes me uncomfortable, I refuse to go to CDMA, and there isn’t another comparable GSM provider with the same benefits. I’ll take a text message hike over call overages anyday.

  13. notallcompaniesarebad says:

    Chris, thanks for your post. It adds a lot of perspective.

  14. notallcompaniesarebad says:

    Oh, and I don’t know for sure, but you might want to block out the 2D barcode in the upper right of the bill as well.

  15. blander says:

    As far as I know the last case to challenge Cingular’s arbitration clause would still apply here, and I would think a California court would still find the terms unconscionable. See Winig v. Cingular Wireless. The court in that case found that the clause was procedurally unconscionable because you couldn’t negotiate the service agreement and didn’t care that you could go to a competitor that didn’t have such a clause.

    The court also touched on substantive unconscionability, but that may or may not have changed based on the new terms of the agreement. However, in the end I think anyone in a state with consumer protection laws such as California could still bring suit. Of course, always consult a lawyer for these issues.

  16. 5cents says:

    I’m wondering if it’s possible to use this to get out of your contract. Can they really just change the terms of agreement and expect you to fall in line? I assume you have to give notification you have read and agree to the changes (usually confirmed by your next payment). In which case, couldn’t you do something similar to when your credit card company changes your interest rate?

    When my card changes interest rates, I always have the option of rejecting the change via a formal, written letter to them. In the credit card context, I can’t use the card anymore and if I did, the change would become effective.

    Is something similar possible with Cingular change wherein the end result is a termination of contract without ETF because you reject the “new deal?” I suppose this is directed at supposed lawyer Chris. Sorry if its muddled.

  17. wesrubix says:

    Chris,
    I have seen this kind of clause before, but only when initially setting up agreements (both between individuals, businesses, and both). I’m more bothered by the action on Cingular’s part because it seems like a CYA (cover your ass) maneuver given the text change. Yeah they’ve established what the text change is feature and not subscribed service, but they also rode the risk of a class action due to pushing a significant (%-wise) price change. I did notice the “sweetness” of Cingular covering the legal and filing costs of the arbitration (I think they start ~$125).

    Viriiman,
    I went from Xpressmail to MediaMax200 ;)

    Overall, I hope the AT&T return bodes well for us. AT&T has been good to a lot of friends of mine in the past. One told me during a call she made to customer service, AT&T actually suggested she use a *cheaper* plan because she wasn’t using enough minutes to justify her current one.

    Cheers,
    Curtis

  18. droppedD says:

    “One told me during a call she made to customer service, AT&T actually suggested she use a *cheaper* plan because she wasn’t using enough minutes to justify her current one.”

    that happened to me once when i was on Verizon, and my friend said T-Mobile did the same thing when he called them a few weeks back. I’m not sure why, but it seems fairly standard? weird, i know, but still, not all that unusual.

  19. kerry says:

    @JohnStracke -
    The text messaging is part of the contracted services because a non-package per-message service is automatically included. Changing the rate for incoming and outgoing text messages affects those without texting plans, which are totally optional. Since you can’t control who sends you unsolicited text messages (just as you can’t control who makes unsolicited phone calls to you) it’s a material change in the contract terms to change the rates of those unsolicited incoming text messages. It’d be the same thing as if they changed your per-minute call rate.
    Cingular, however, disagrees with this logic.

  20. wesrubix says:

    droppedD,

    That’s cool to hear it does happen on other networks. Not all the big boys are that bad *all* the time…

    Anyway, I called Cingular customer service and played the nervous nice guy asking questions. There was more chitchat, but here’s the gist:

    Q1. Does the txt rate change apply to me if I exceed my 200 messages/mo?
    A1. No, it’ll stay at 10 cents.

    Q2. Have you heard of the change in dispute resolution?
    A2. No.

    Q3. Did you see the all caps notice on the front of my bill?
    A3. Oh wow, yeah I see that. That’s all I got though. I’ll have to wait until I get my next bill to see what that’s all about.

    Q4. I’m not comfortable with this change in the contract, is there a way I can not be in this contract but remain a paying Cingular customer?
    A4. Hmm hang on. [politely puts me on hold] I asked around and they say to call the number on the pamphlet you got.

    So there’s two numbers in this pamphlet: Cingular Customer Service 1-800-331-0500
    or the American Arbitration Association 1-800-778-7879

    Hmmmmmmmmmmmmmmmm

  21. Karmakin says:

    wesrubix/DroppeD. That’s the beauty of outsources customer service. An individual CS rep may have more loyalty to the customer they’re talking to than the company they’re representing.

  22. timmus: “I wonder how they’ll react to a telco trying to take their bread and butter away.”

    These are all over the place. Chances are your health insurance company made you agree to mandatory arbitration to get the policy. Plus? Lawyers write them and lawyers constitute the lion’s share of arbitrators. So they’re not suffering. However:

    As segfault said: “But, these arbitration clauses are part of a “form pad” contract … the consumer has no meaningful choice to use a wireless carrier that doesn’t demand arbitration, and there’s a decent chance of getting a court to set aside the arbitration clause on those grounds.”

    And as someone else mentioned a little further down, courts are just generally unfriendly to boilerplates (“form pad” contracts) where the consumer has no opportunity to dicker the terms; without dickering, some courts will hold, no true contract was formed, or the contract was unconscionable.

    These mandatory arbitration clauses irritate the hell out of me becuase they’re definitely there to screw consumers and attempt to protect companies from being sued for genuine wrongdoing. But they’re so rarely held legal in cases of genuine harm to the consumer that I generally ignore them.

    A lot of these clauses in the past forced you to submit to arbitration using arbitrators of the company’s choice often from within the company and forbidding YOU from having a lawyer (but of course their “representative of the company” would be a lawyer). Cingular’s here isn’t so bad because it’s under AAA rules, which are best-of-breed as far as arbitration rules go, and if more companies move in this direction, probably more of the arbitrations will hold up.

    I expect courts will still put them aside, though, when it would clearly harm the consumer to go ahead with arbitration or when the arbitration was manifestly unfair.

    Consult a local lawyer in your jursidiction, etc. I expect this also varies a lot based on your jurisdiction; the California courts come to much the same practical resolution as my locals do, but by very different reasoning. (Which is probably why every lawyer who visits Consumerist could think of a different reason to knock this down if they had to take it to court!)

  23. SuperJdynamite says:

    “First, people can, and do give up Constitutional rights by contract … In exchange for keeping our jobs, we agree not to fully exercise our right to “free speech” about our boss.”

    Many people mistakenly believe that the First Amendment guarantees them the right to say whatever they whenever they want.

    This is not true.

    The First Amendment only protects you against government censorship. It does not allow you to say whatever you want about your boss or any other private party.

  24. SexCpotatoes says:

    wesrubix and droppedD, the “lower your minutes you don’t use enough” could be a ploy to get them on a lower and cheaper plan, but their usage may not be that low every billing cycle, and therefor, the company could get more money out of the overage charges each month on the customer’s account than they get out of the higher rate plan.

  25. This whole thread of comments has just felt like a huge advertisement for justifying the attitude that the average consumer should just accept that you have to give up certain rights in order to have certain services.

    Did anyone else get that creepy feeling reading through these comments? A couple of them sounded like flat out advertisments. Maybe I am just reading to much into this.

  26. wesrubix says:

    Holden,

    That’s pretty much how I felt when I first saw the notice in my bill. :-

    –Curtis

  27. wesrubix says:

    I just got off the phone with Cingular. The CSR wasn’t all that sure what to do, so I told her “Cingular changed a section of the contract, and I don’t agree with it. They broke the contract, so I want to be out of contract.”
    She said “um ok I’ll transfer you to Customer Relations.”
    I explained the situation to the CR guy, and he put me on hold for a bit. When he came back, he explained that this is an *addition* so that I am not waiving my right to trial by jury or class action, that dispute resolution has to go to arbitration first.
    What do you guys think?

  28. blander says:

    I’m not a Cingular customer but it seems like there was already an arbitration clause and this is an amendment of it, probably due to Cingular getting slapped around in the California courts.

    From that case and the new terms it looks like they’re making arbitration more favorable for the consumer.

    However, I’d still say the clause is most likely void in California. As for being a change in the terms of contract, I’d say that’s a harder call since it would appear that they’re just adding things that are beneficial to the customer, and I really don’t know how a court would view that.

    And the CSR’s response I think is kind of bogus. It’s binding arbitration and the contract specifically says that you waive the right to a trial by jury and class action.

  29. youngcalihottie says:

    i used to work at cingular. so i may be able to provide a little bit of insight.

    ————

    “when I wanted to switch to a different SMS package; they did it for me without any impact to my contract.”

    Text messaging is an optional feature and is not part of your price plan. You should always be able to add, remove, or change your text messaging at any time. The only exception I can think of would be if you somehow have a plan (maybe an old at&t plan) that bundled text messaging with your minutes for one monthly price.

    ————

    “One told me during a call she made to customer service, AT&T actually suggested she use a *cheaper* plan because she wasn’t using enough minutes to justify her current one.”

    This is strictly against the rules. No rep should offer any price plan advice or mention a lower plan, unless you specifically ask them to review your plan for you. If you ask for a price plan review, then the rep can give you advice, even if it includes a lower plan.

    ————

    “The text messaging is part of the contracted services because a non-package per-message service is automatically included.”

    pay-per-use messaging is automatically added for you as a convenience, but you can choose to deline it when you sign up, or anytime thereafter. you can always add, remove, or change your text messaging service.

    “Since you can’t control who sends you unsolicited text messages (just as you can’t control who makes unsolicited phone calls to you) it’s a material change in the contract terms to change the rates of those unsolicited incoming text messages.”

    Regardless of whether the rate is 1 cent or 100 cents per message, you already understand the possibility of unsolicited messages when you agree to the service. The price really doesn’t affect this possibility. If you do receieve unsolicited messages, you can call and usually can receive a credit for that. Every incoming and outgoing message is saved and a record of the transaction “10am Jan 2 Incoming Message from 555-1212″ is shown on the bill if you have detailed billing. The rep can probably tell if it is someone you were having a conversation with or legitimately someone you never messaged. If you have a problem now you can write in your complaint and go to arb with cingular paying for the filing. Now you may even be able to say “look, i dont know who this is so i would appreciate a credit. you can either credit me the $50 or we can go to arb and that will cost cingular $125 minimum”. (I’m not a lawyer so I am not 100% sure if this is possible. Consult a lawyer with questions.)

    ————

    “That’s the beauty of outsources customer service. An individual CS rep may have more loyalty to the customer they’re talking to than the company they’re representing.”

    I think most Cingular reps are in-house. Outsourcing reps still have to worry about being loyal. If cingular’s customer base deminishes, then so does the need for their jobs.

    ————

    “could be a ploy to get them on a lower and cheaper plan, but their usage may not be that low every billing cycle, and therefor, the company could get more money out of the overage charges each month”

    there is no secret ploy. and cingular’s rollover minutes might cover you for that month you go over, giving you a chance to change back to a higher plan before it happens again.

    ————

    “I just got off the phone with Cingular”

    Other than initial training when you get hired, cingular training is piss poor and rarely even occurs. and even when they do have training, its after something has already been out there and youve either figured it out already or messed up already. calling them unfortunately wont solve much. i’m sure they were not even notified about this let alone trained on it. evidence of this:

    “Q2. Have you heard of the change in dispute resolution?
    A2. No.

    Q3. Did you see the all caps notice on the front of my bill?
    A3. Oh wow, yeah I see that. That’s all I got though. I’ll have to wait until I get my next bill to see what that’s all about.

    ————

    i cant find the quote, but someone said they called and cingular said they wouldnt be affected by the text price change.

    now i for one havent even heard about this yet. but either way, text bundles usually are not affected by the pay-per-use rate. this is because most (not all) bundles have their own special overage rate. fake example: “$5 for 100 messages, and only 5cents each after your 100!”

    ————

    If you receive more messages than you send, consider Enterprise Paging, which pretty much gives you unlimited incoming messages for $10. go to EnterprisePaging.com to sign up. Not all accounts will be able to add it. (note: this monthly price and # of messages covered may have changed since i worked there. call customer service first with questions.)

  30. snowferret says:

    Total crap. Who do they think they are?

  31. drabchenia says:

    Ronald Regan once said the most feared 8 words in the english language are I’m from the government I’m here to help. Do you really think cingular is doing this for us?