Those trying to cancel pacts early find it’s difficult, unless they pay a fee.
The Orange County Register
Not even death can get you out of some cell-phone contracts.
Richard Rutkowski’s wife, Sharon, died of cancer in August. When the Irvine man tried to cancel a contract with Cingular Wireless for his wife’s phone, the company charged him an ”early termination fee” of $150, saying her death didn’t nullify the two-year contract.
Rutkowski is among hundreds of local consumers who have learned it’s easier to buy a mobile phone than to return one. Parents who took cell phones away from children who racked up huge phone bills, people who moved to places where the cell phone no longer worked well and consumers who canceled because of poor transmission quality say they had to choose between paying a stiff termination fee or ruining their credit rating.
Analysts say cell-phone companies need to impose termination fees because it costs them about $300 to sign up one customer — because of the high cost of building cell-phone networks and because consumers don’t pay the full cost of the phones they buy. Termination fees are how companies recover those costs when customers don’t fulfill their contracts.
AT&T Wireless, Cingular, Nextel, Sprint PCS, T-Mobile and Verizon Wireless all require consumers to sign a one- or two-year contract for perks such as subsidized phones, bonus ”anytime” minutes and unlimited night and weekend minutes. Their ads generally warn customers they will be penalized if they cancel before the end of the contract, but the companies don’t hint at how rigid they can be in imposing cancellation fees that range from $150 to $500.
The Rutkowskis signed up for a $70-a-month plan that gave them four phones and 1,000 shared minutes. Richard Rutkowski looked at the phones as an investment in his family’s safety, he said.
His feelings have changed. After Sharon’s death, the family used their mobile phones to make funeral arrangements and receive condolence calls. That put them over their monthly allotment of minutes — their bill shot up to $355.
When Rutkowski tried to turn in his wife’s phone, a customer service representative told him that he was responsible for fulfilling her portion of the contract. He explained that his wife had passed away, but was told he’d have to pay $150 anyway.
Cingular dropped the charge only after it received an inquiry from The Register.
”I’m angry at myself for not getting into the terms of the agreement,” Rutkowski said. ”I cringe every time I see the name Cingular.”
The six big wireless companies give customers one to four weeks to try out their phones. It’s expensive to quit a plan after those trials.
Kathleen Sheldon, who is in the Air Force, bought a Cingular phone at the Irvine Spectrum after returning from an overseas assignment. When she reported for duty at Edwards Air Force Base a few weeks later, she learned that it wouldn’t work there.
Cingular‘s 15-day return period had expired by then, so Sheldon had to pay more than $200 to return the phone — $150 for early termination, $36 to activate the service, plus regular charges for the first month of service.
Cingular has come under more scrutiny than other carriers. State regulators are investigating hundreds of complaints from consumers who say they had to pay early termination fees when they returned their phones because of poor reception.
Cingular spokeswoman Jennifer Bowcock said the company is cooperating with the state’s investigation. The company has spent $1 billion in the past year to improve its California network, Cingular said. But consumer advocates aren’t satisfied.
”Consumers shouldn’t have to pay extra to get rid of a bad service,” said Doug Heller of the Foundation for Taxpayer & Consumer Rights, based in Santa Monica. ”But nobody’s telling these companies not to swindle you, so they go ahead and swindle you.”
Jane Goth of Yorba Linda wants to cancel her account with AT&T Wireless because her phone doesn’t pick up any signal in Norco, where she recently started stabling her horses. She likes to carry a mobile phone with her while she’s riding in case she needs to call for help.
AT&T has told Goth that it would cost her $150 to cancel before her contract ends.
”If I pay that fee, I can’t afford to get an account with another company,” Goth said.
Sandy and Bill Kepsil, also of Yorba Linda, opened an AT&T Wireless account for their 19-year-old son, then canceled it after a few months because of poor transmission quality. They were charged a $150 early termination fee.
”I was ripped off,” Sandy Kepsil said. ”If they can’t provide the service they say they can give, then they shouldn’t charge you to cancel.”
AT&T Wireless spokesman John Mendez said he’d investigate the complaints.
Sometimes problems over termination fees trace back to the salesperson. Suvada Meggs of Placentia paid $3 for a Verizon phone at a Radio Shack in September, thinking it would be good to keep in her car’s glove compartment. ”I thought it was a bargain.”
Meggs said the salesman didn’t say anything about a termination fee. She learned about it after she got her first bill over a month later. By then it was too late for her to avoid the $150 termination fee.
Radio Shack refused to take the phone back. Clerks at a local Verizon store said they couldn’t help, but the company agreed to waive the termination fee in response to an inquiry from The Register.
Public Utilities Commissioner Carl Wood said in an interview that his agency has received many complaints from customers who don’t understand the consequences of the contracts they sign. ”People who tend to be vulnerable are young people who are getting into contracts for the first time or also older people who — maybe their eyesight isn’t so good — they’re not used to reading
the fine print.”
He has spent more than three years investigating such problems and drafting rules to regulate the mobile phone industry, including establishing a mandatory format for disclosing contract terms to consumers. The commission is likely to vote on the rules, dubbed the Consumer Bill of Rights for Telecommunications, in the next few months.
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