New Legislation Would Limit Wireless Contract Termination Penalties

Two advocacy groups, the Consumer Federation of America and the Consumers Unions, endorsed a bill yesterday that would limit the amount that wireless, cable, and telephone companies could charge customers for early cancellation of their contract. Specifically, it would require companies to waive cancellation fees for the first 30 days, and pro-rate any fees after the first 30 days (something Verizon already does, but no other mobile carrier that we know of).

A lawyer for the Consumers Union sums it up quite nicely:

Contract extensions and early termination fees are the #1 consumer annoyance with the wireless industry. Consumers are powerless to negotiate better terms with their cell phone carrier, but this bill would help to level the playing field.

The wireless industry’s major trade organization sent forth a lesser demon to announce that this counts as unnecessary interference, and that consumers can already avoid this whole issue by purchasing pre-paid wireless plans. Funny, we couldn’t purchase a pre-paid plan for our last two phones—we checked for exactly that reason.

“U.S. curbs sought on fees to quit wireless contracts” [Reuters]
(Photo: Getty)

Comments

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  1. TechnoDestructo says:

    This is just going to result in the fees being drastically increased.

  2. mph says:

    Verizon wireless prorates early termination fees? That can’t be right. Is it?

  3. Yourhero88 says:

    @mph: no, they prorate any charges accrued during the initial 30 day trial run, which means that there is no early cancellation if you decide not to renew service when the 30 days are up.

  4. travisw says:

    Guess what’s better than a pro-rated ETF? No ETF. Cincinnati Bell Wireless does not use contracts. How can they stay in business? Oh, by giving the consumer what he/she wants. (And no, I don’t work for them, I am just a happy customer.)

  5. medief says:

    @technodestructo is right. They’re going to get their $$$, one way or the other.

  6. Canadian Impostor says:

    @TechnoDestructo: I have to agree. Instead of it being a $175 cancellation fee they’ll just raise it to $400 or something.

  7. Cowboys_fan says:

    “Funny, we couldn’t purchase a pre-paid plan for our last two phones-we checked for exactly that reason.”

    Perhaps “we” should be looking more for a data plan for our specific phone and look instead for a calling plan!

  8. amorde says:

    Maybe, but competition will keep them from raising the prices too high. Giving you a free phone worth about $30 and charging you $175 early termination fee is unconsionable. They should also force companies to unlock your phone once you complete your contract or pay the termination fee. After all, their justification is that they pay for the phone, that’s why it’s locked. But if you pay for it through the termination fee or your monthly subscriber fee, they have no rights to force you to be locked to their network.

  9. flashing12 says:

    with regard to ETFs, I just left Sprint. Had two lines there, one was out of contract and one had a year to go on a 2 year. It goes without saying that I expected a $200 hit on the 2nd line. Imagine my surprise when the bill came for $150! Only $50 off but it was $50 more than I expected, and I didn’t even ask for it.

  10. jamar0303 says:

    Really, if they’re going to subsidize phone prices and charge the ETF, at least they could give good subsidies. Over in Japan subsidies run up to $300-400 (estimated; they have phones with VGA screens, 3.2MP cameras with optical zoom, MP3, and stuff like that for free). If they’ll subsidize that much I’ll get into a contract.

  11. jepow19 says:

    I just tried this week to cancel my verizon wireless service since it constantly drops calls from within my apartment and was told they cannot guarantee service in your home and my only two options were to either pay the ETF ($175) or buy out my contract ($39.99 x 6 months).

    So no they do not pro-rate the ETF.