However, whether the amount customers save through prorated termination fees is substantial remains to be seen, as the companies have not announced how their prorating system will work. Meanwhile, lawsuits against unfair cell phone company practices are making their way through the courts, even as the carriers congratulate themselves on making "consumer friendly changes" to their contracts.Yet another state senator is working to have a cell phone user bill of rights passed that would limit the amount of abuse cell phone customers have to endure. Jim Waring, senator from Arizona, received such poor treatment from his cell phone company that he created SB 1010, which would protect cell phone customers from poor treatment on the part of their carriers. Among the protections included in the proposed legislation:
• Carriers would not be allowed to require contracts of more than one year;
• Customers would be allowed to cancel their contract for any reason within 30 days with no penalty;
• Users could cancel their contracts if the carriers violate their contract;
• Carriers would have to provide itemized contracts without additional charges; and
• Carriers would not be allowed to force customers into contract extensions when their phones break during warranty periods.
Waring is just the latest in a long line of lawmakers who are working to change unfair cell phone company practices. Some have been moved to action because of their own frustration with cell phone companies while others have heard too many complaints from consumers who are tired of being treated poorly.
Some companies are now prorating their early termination fees, but the amount taken off the fee does not always work out to a huge discount. For example, Verizon's early termination fee starts out at $175. For every month a customer stays in his or her contract before canceling, five dollars is deducted from the early termination fee. So, a customer who cancels after only two months would receive a $10 deduction. This is still far better than companies who charge a flat early termination fee regardless of when the customer cancels, but for those people who sign a contract only to have poor service on their phone, or have a phone that suddenly stops working two months into the contract, a $165 early termination fee is still hefty charge.
Companies that have now agreed to prorate their early termination fees include Verizon, AT&T, Sprint and T-Mobile. The exact details about how the prorated fee would work for AT&T, Sprint and T-Mobile have yet to be announced. However, many companies have also announced that customers will not have to extend their contracts when they make changes to their rate plans—a practice that often resulted in customers paying early termination fees to cancel when they thought their contracts had already expired.
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Cell phone companies argue that early termination fees are necessary to offset the cost of subsidizing cell phones. That may be true in some cases, but cell phone companies charge early termination fees far more frequently, and at higher rates, than is necessary to cover the subsidy. For example, if a customer cancels his contract with only two months left in the contract, does the carrier really still require $175 to offset that particular cell phone's subsidy? Furthermore, some customers made changes to their rate plans late in their contract and then wound up unknowingly extending their contracts by two years. When they tried to cancel their contract, after having a contract for well over two years, they were still charged an early termination fee of $175. Is that fee really necessary to cover the subsidy when the initial two-year contract is well over?Although the recent move to prorate early termination fees is a step in the right direction, for some consumers it comes too late. Many cell phone customers have already been forced to pay hundreds of dollars in early termination fees to cancel their contracts—even if they were canceling the contract because of poor service. Some of these consumers have filed lawsuits against their cell phone carriers, arguing the early termination fees violate consumer protection laws and constitute an unfair business practice. Although cell phone companies have fought to have the lawsuits dismissed, so far the courts have ruled that the lawsuits can continue—a sign that at least the courts believe the consumers' complaints should be heard.
