Member Login:



Not a member? Signup!

Quickpoll:

Do you plan to own your own business someday?
yes
no
don't know
I already own a business

EDUCATORS:

Add YOUNG MONEY to your classroom activities or school library.   Free evaluation copy for teachers and librarians.

Canceling a contract with cell companies often is difficult, costly

Subscribe:

Order YOUNG MONEY Magazine NOW and receive two FREE Bonus Issues!
Subscribe »

Technology: Most Read

We may be visiting your campus! Check out our event schedule and photo albums of past events.

schedule    photos  

By Jason Gertzen , McClatchy Newspapers

November 05, 2007

KANSAS CITY, Mo. - Breaking up is hard. And expensive.

Especially when the relationship you are trying to end is with your cell phone company.

Sprint Nextel Corp., Verizon Wireless and other large wireless phone companies have been taking shots recently from Congress, consumer advocates and state officials over allegations that they treat customers unfairly. A big source of complaint is the hefty - and what some claim are confusing or deceptive - fees the companies impose when customers cancel service early.

"When I was with Sprint they did a pretty good job of resolving problems," said Greg Wiley of Overland Park, Kan. "It is leaving Sprint that is the problem."

Leaders of organizations such as Consumers Union and federal lawmakers are calling for uniform regulations requiring cell phone companies to eliminate, or at least prorate, fees that come when a customer cancels service before a multiyear contract expires.

Verizon made such a change late last year and AT&T Inc. followed with a similar action earlier this month. Sprint allows changes without penalty in the first six months, but still charges the early-termination fees. Company representatives, however, urged consumers to stay tuned for coming announcements that they said would please customers.

"Improving customer loyalty is a top priority for Sprint," said Paul Saleh, Sprint's interim chief executive officer.

Simplifying a series of pricing plans and taking other steps to reduce hassles for customers are among a series of new initiatives, Saleh said.

"We want to remove anything that causes customers to be confused or frustrated," Saleh said.

Sprint's announcements won't come soon enough for Wiley. Wiley had been a Sprint customer for five years, but was lured away this summer. He was technologically smitten by the Apple iPhone, the heavily hyped device available exclusively on AT&T's network.

When his last bill arrived from Sprint after he switched, Wiley was smacked with more than $300 in "early termination fees" for his phone and his wife's phone. He thought his contract expired long ago, but it turns out his contract actually was extended when a discount was added to his account a year earlier when he changed his calling plan.

Wiley said he never would have agreed to the account changes if he knew it would subject him to cancellation fees. While trying to fix the problem, he spent hours talking with Sprint clerks. Some said they didn't understand the cause of the charges. Others assured him the charges were resolved. Then he got a letter saying he must pay up or have his account handed to a collection agency.

He eventually negotiated to pay about $150, essentially the cost of the discount he had received. Sprint waived the early-termination fees.

"What they want to do is extract their pound of flesh, their cash," Wiley said. "I would never do business with them again."

His experience doesn't appear to be a completely isolated case with the cell phone industry generally, and particularly with Sprint. Wireless phone companies consistently earn back-of-the-pack rankings in Consumer Reports' customer satisfaction surveys.

Other Sprint customers interviewed by The Kansas City Star, the experiences of others detailed in a lawsuit filed recently against Sprint by the Minnesota attorney general and information compiled by consumer advocates offer many similar examples.

Sprint representatives make sure they explain clearly to customers that discounts for phones usually are accompanied by requirements that the customer buy wireless service for one or two years so Sprint can recover its costs for subsidizing the phones, said John Taylor, a Sprint spokesman. The company also has pay-as-you-go options that don't require contracts, but the phone discounts often are not as large as those offered with long-term calling plans.

"There are millions of customers across the country who sign that agreement and renew it year after year because they are happy with our service," Taylor said. "The notion that 220 million Americans who sign these agreements are duped by wireless companies into signing them is erroneous."

AT&T has made a series of customer-friendly service changes, but found that inflexible calling plans and flat-rate early termination fees remained a widespread irritant among consumer groups, regulators, customers and others, said Mike Bennett, an executive with the nation's No. 1 wireless company.

Recently AT&T said customers changing calling plans no longer would have to extend their contracts and if they left early, the cancellation fee would be progressively lowered during the term of the agreement.

These changes are a response to market forces in a competitive industry, a more preferable approach for all than a mandate imposed by regulators, Bennett said.

"I believe that wireless industry services can often be confusing and complicated," Bennett said. "We have been trying to do things to make it easier to understand."

---

BIG FEES IN THE FINE PRINT

Customers receiving free or heavily discounted wireless phones often are locked into one- or two-year calling contracts so the phone companies can recover their costs over time. Customers canceling early can face hefty early termination fees.

Some companies, such as AT&T and Verizon, will reduce those fees the longer a consumer remains with them. Sprint has yet to make such changes.

Consumer advocates urge cell phone customers to:

- Ask detailed questions and read carefully to learn the terms of their calling contract. Pay particular attention to fees charged for early cancellation.

-  Consider options among various cell phone companies because each has different policies.

- Test new phones heavily in a wide range of locations in the first weeks after a purchase. Nearly all of the companies allow penalty-free changes to calling plans or more simplified returns during an initial grace period.

- Remain polite but persistent if call quality changes or other wireless service problems emerge. Contact the company's customer service call center, concisely describe the nature of the problem - such as a series of disconnected calls - which can be verified by calling records. Sometimes the company can resolve the problem, at least waive any cancellation fees or offer some other acceptable resolution.

---

© 2007, The Kansas City Star.

Visit The Star Web edition on the World Wide Web at http://www.kansascity.com.

Distributed by McClatchy-Tribune Information Services.

-----