Breaking up is hard to do
Posted on Thursday, October 4, 2007
How tough is it to get out of your wireless phone contract ? The Washington Post reported recently that a Chicago consultant named Corey Taylor, fed up with dropped calls and a string of defective cell phones, was so irate at the thought of paying $ 175 to get out of his long-term contract with Verizon Wireless that he faked his own death. Really. Taylor made up a fake death certificate and had a friend fax it to Verizon after reading on a blog that wireless companies would cancel the contracts of deceased customers.
“I thought, ‘What have I got to lose, besides a cell phone I despise ?’” Taylor told the Post.
The company eventually caught on and Taylor had to pay up.
“In the end, I forked over the money,” he says. “But I bet I sent a definite message about how much people hate being strapped to a cell phone that doesn’t work.” Sign up for cell-phone service with just about any company and you will have to sign a multipage contract, sometimes titled “terms and conditions of service” or a “terms of service agreement.” It specifies, among many other things, that if you cancel your ser- vice before the end of the contract — usually one, more often two years — you will have to pay your wireless company a penalty, up to $ 250, variously called an “early cancellation fee,” an “early termination fee,” or just a “termination fee.” AT&T Wireless (formerly Cingular ) and Verizon Wireless charge a $ 175 cancellation fee; Alltel Wireless and Sprint want $ 200. That’s according to contracts for Arkansas customers of those four major wireless companies, available online through Consumers Union. (www. consumersunion. org / pub / core _ telecom _ and _ utilities / 000732. html ).
“If you subscribe to a Service for a fixed term and you terminate that Service before the expiration of the fixed term then you will be required to pay us an early cancellation fee... $ 200 per line for any early cancellation,” says Alltel’s “Terms and Conditions for Communications Services.” AT&T’s “Terms and Conditions” states in its second line, “An early termination fee of $ 175 applies if service is terminated before the end of the contract term.” Deeper in the text, however, is an amplification, which adds, however, that you can cancel your contract within the first 30 days, “for any reason and without incurring the Early Termination Fee.” The problem ? “Most people just don’t read the contract,” says Loreesa Botkin, spokesman for the Better Business Bureau of Arkansas. “It’s a legal, binding contract, and you still need to read the fine print.” “Read all documents carefully prior to purchase,” recommends Consumers Union. “Be sure to get all spoken promises in writing. And remember to keep a copy of the ‘ Terms and Conditions’ and related marketing materials and brochures that describe your plan.” Botkin says gripes involving telecommunications companies are easily among the top 10 on the agency’s complaint lists.
According to the Council of Better Business Bureaus, consumers nationwide filed more complaints about cell phones than any other industry for the past three years.
Most of those complaints involve billing and service problems, but contract issues are up there as well.
Mike Bennett, AT&T’s executive director for state and local government and a spokesman for the company’s “consumer-friendly initiatives,” says his company will work with customers with hardship cases — say, if you’re moving to an area that doesn’t have AT&T service, if you’re in the military and being shipped overseas or you have genuine service quality issues.
Otherwise, Bennett says, “It is a contract, and it contains an early termination fee. If they’ve chosen the contract option, they need to fulfill the rest of the contract or pay the termination fee.” Bennett explains that a one year or two-year contract is a trade-off for what is usually a sharp discount in the cost of your phone — sometimes you can get a phone that lists for $ 200 or $ 300 as cheap as free as an incentive to sign up — and, “what the industry has not done a good job of explaining, the guaranteed lowest price per minute for the length of the contract.” Cancellation fees, Bennett says, help offset the phone discounts and the company’s other upfront costs.
Customers do have the option, he says, of going without a contract, on a pay-as-you-go basis — 20 percent to 30 percent of AT&T’s customers do. The advantages are that there’s no credit check and no termination fee; the disadvantages are that the customer will pay full price for the phone and “a higher effective price per minute.” He admits that AT&T has probably been the beneficiary in recent months of a flood of folks who have bought more than a million new Apple iPhones. The iPhone currently only operates on AT&T service and using one requires a two-year contract.
The Washington Post reports that Al Chang, a consultant from Berkeley, Calif., found a way to ease the pain of his cancellation fee. Before the iPhone was released, he signed up for a twoyear contract with AT&T with the purchase of a Blackberry for a discounted $ 150, then turned around and sold the Blackberry online for $ 350 and bought an iPhone. “That way, I have $ 200 in my pocket — so if I ever do want to cancel, I haven’t lost any money on the deal,” he told the Post. “I think I actually made a profit.” COMPETITIVE PRESSURES However, with the wireless industry maturing and competition between providers becoming less about gaining new customers and more about holding on to the customers they have, companies have begun to soften their stance a little, Botkin says.
“The cell industry at first was all about [attracting ] new people,” she explains. “Now it’s all about keeping customers.
“ It’s getting much better; they’re becoming more understanding instead of being so hard-core.” In November, Verizon started prorating its contracts, reducing its early termination charge based on the length of time remaining in the contract.
Verizon’s closer-to-plain-English “Customer Agreement” says if you signed your contract before Nov. 11, 2006, it will be a flat $ 175 to cancel early. But “for lines of service with minimum terms extended on or after 11 / 16 / 06, the early termination fee is $ 175, which will be reduced by $ 5 for each full month toward your minimum term that you complete.” In other words, cancel your two-year contract after one year and Verizon will knock $ 60 off your $ 175 cancellation fee.
Consumers Union reported in 2006 that before it became AT&T Wireless, Cingular was prorating its cancellation fees in nine states.
Among AT&T’s current “consumer-friendly initiatives,” Bennett says, is to carefully explain to customers upfront what the contract involves and helping them make decisions based on how often, when and where you plan to use the phone and what you plan to do with it (just for talking, sending text messages or pictures, e-mail, etc. ).
Bennett also touts the company’s three-page “Customer Service Summary,” which among other things offers a summary of the plan you’ve chosen, a sample of what your bill will look like and a simplified, plain-English version of the “Wireless Service Agreement” in a format easier to read than the company’s dense-type, multipage, laden-with-legalese formal contract.
“The key is, upfront, being open and honest,” Bennett says.
WHEN ALL ELSE FAILS... There are ways, albeit difficult, to squeeze out of your wireless contract. Sandy Loehman of Winchester, Va., told the Washington Post that she managed to talk her way out of her Verizon Wireless contract, avoiding a $ 150 fee by reading the fine print on her bill. In April, she noticed that the price for receiving a text message from an international carrier had increased 5 cents. Most wireless companies will cancel a contract for free if a billing change negatively affects a customer. “I argued with five customer-service reps and used a lot of big words,” Loehman said.
After she got hold of a supervisor, she threatened to complain to the FCC, the Better Business Bureau and the Virginia state’s attorney’s office. “Eventually, I think they just didn’t want to deal with me anymore.” Wendy Bounds, senior editor of the Wall Street Journal, provided some advice to viewers of ABC’s Good Morning America in April, recommending you keep your contract handy and a sharp eye out for “changes that adversely affect your plan,” such as sudden fee increases.
Bounds also suggested that you can get out of your contract by being an undesirable customer — for example, by driving outside your coverage area and making lots of “roaming calls,” which cost the wireless companies money because they have to pay another carrier to transmit them.
It’s expensive and time-consuming, and “obviously, this is not a very realistic option for most people,” Bounds said, “but it’s fun to think about.” Another option is to find somebody willing to take the remainder of your contract off your hands. Two Web sites — CellTradeUSA. com and www. CellSwapper. com — match people wanting to get rid of the remaining time on their contract with people looking for shorter cell-phone commitments.
Web site SmartMoney. com (www. smartmoney. com ) reports that the CellTradeUSA service is free for buyers, who can search ads posted by sellers based on criteria such as cellular company, contract length, monthly price or type of phone offered.
“Get Out” members pay a $ 19. 99 fee “to gain unlimited access once you are satisfied with your response. The membership will not expire until you successfully transfer your contract responsibility to someone else,” according to the CellTradeUSA site.
However, neither site is equipped to handle the actual transfer. It’s up to you to contact your carrier and complete the transfer process.
“Service providers are happy to assist you with a contract transfer of responsibility,” Cell-TradeUSA assures.
If you choose to risk it, the site recommends that you make sure you know your cell-phone carrier’s rules in advance. “Call your cell-phone carrier and ask about any specific requirements they may have in order to transfer your contract,” says Smart-Money. com.
“All big carriers currently allow transfers... but how they do it varies. T-Mobile allows you to complete the transfer over the phone... while Sprint PCS typically requires an in-store signature. This may limit your pool of prospective buyers to folks who live nearby.”
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