Cell Phone Companies Under Fire for Early Termination Fees

Los Angeles, CAWith a major lawsuit filed against AT&T and lawmakers questioning the tactics of cell phone companies, some cell phone carriers are now moving to change their practices, including [early termination fees]. However, the move comes too late for many customers and not enough cell phone carriers are following suit, meaning that scores of customers are still responsible for paying ridiculously high early termination fees.

A recent edition of the Kansas City Star gives the example of a former Sprint Nextel customer who was charged $300 in early termination fees when he tried to cancel his service. The customer thought his contract had expired and was surprised to learn that it was extended a year ago when a discount was added to his account. Like many other customers, the man says he would never have agreed to change his account if he had known he would pay early termination fees because of it.

Many customers do not realize that they have inadvertently extended their contracts until they try to cancel service and are told that they must pay an early termination fee. The practice is common among cell phone carriers, but it is one that few people know about. Essentially it means that any time a change is made to a cell phone contract, the customer agrees to extend or renew his or her contract. Although cell phone companies claim they have a policy of notifying their customers about this contractual condition, customers complain they were never informed and would never have agreed to the extension if they had known about it.

AT&T has joined the ranks of cell phone carriers that will now prorate early termination fees. According to an announcement made earlier this month, by early next year customers who cancel their cell phone contracts will pay a prorated fee rather than the standard $175 termination fee. The company also announced that customers who change their calling plans while their contract is still in effect will not be forced to extend their contracts.

Earlier, Verizon Wireless made some changes to its contracts. The company has begun using prorated early termination fees and no longer requires customers to extend their contracts when changes to their contracts are made. Verizon also allows customers to use cell phones for 30 days without a commitment, so that customers who are not satisfied with the company's service can cancel the contract without paying an early termination fee.

Meanwhile a lawsuit against T-Mobile, which has just been given the go-ahead to be heard in court, could have far-reaching consequences for cell phone users and the industry. The suit involves a question of whether or not an early termination fee constitutes an unfair business practice. If the early termination fee is found to be an unfair business practice, meaning that it is used to prevent customers from switching companies rather than being used to offset costs, many more cell phone companies could find themselves involved in legal battles.

While the recent moves of some cell phone companies are a step in the right direction, they do no good for the people who have already paid hundreds of dollars to cancel their cell phone contracts. Many people have already canceled their contracts because of poor service and they have been forced to pay anywhere from $150 to $300 per cell phone in order to do so. Furthermore, the changes seem to have been spurred by the recent actions of US lawmakers, rather than out of a desire to treat customers fairly.