Locked in to cell fees;

Published on

Consumer advocates are turning to lawsuits to address mounting complaints against wireless-phone companies.

The Orange County Register (California)

Consumer advocates are looking to the courts to deal with what they say is an increase in the number of complaints about cell-phone carriers.

The Foundation for Taxpayer and Consumer Rights said it’s collecting the stories of upset wireless customers and organizing them in preparation for filing a new round of class-action lawsuits focused on alleged overcharges and poor service.

Complaints about wireless carriers have risen even though cell phones are increasingly popular.

As cell phones have become nearly ubiquitous, the industry’s total revenue has more than doubled, from $40 billion in 1999 to $88 billion last year.

Meanwhile, the government has imposed few regulations on wireless providers. Consumer groups such as the Foundation for Taxpayer and Consumer Rights say that leaves them no recourse except the courts, since companies aren’t responding to their concerns.

The Cellular Telecommunications & Internet Association, which represents most wireless carriers, says the industry works hard to address complaints, and that its overall track record isn’t bad considering more than half of all Americans use cell phones.

Harvey Rosenfield, founder of the Foundation for Consumer and Taxpayer Rights, disagrees.
“People are just outraged,” he said. “There’s not another issue that’s got people so angry.”

In October, his group filed lawsuits in Los Angeles against two carriers. One against Cingular Wireless claims the company misled customers about the quality of its coverage, while imposing heavy termination fees. A suit against Nextel complains that a new policy of charging for itemized phone bills makes it difficult for customers to identify billing errors. Both companies say those lawsuits are without merit.

In September, Public Utilities Commissioner Carl Wood recommended Cingular be fined more than $12 million for failing to let customers try out new phones before incurring those termination fees. The commission has not yet acted on the proposed fine.

It makes sense that complaints would be on the rise. The number of U.S. cell-phone users has more than doubled over the past five years, increasing opportunities for mistakes to be made. Typical consumer beefs about cell-phone companies are:

Termination fees: These charges are incurred when a customer cancels service before the end of a contract, often because the customer isn’t satisfied with reception or is moving out of a company’s coverage area. Termination fees generally run from about $150 to $300 per phone.

Extras: Providers have started charging fees above monthly calling-plan costs. For example, carriers now tack on charges to cover what they say are costs of complying with government regulations. Nextel charges customers to receive a paper bill with call details.

Billing: A recent Consumer Reports poll found that one out of four people had been overcharged by at least $10 on their most recent bill.

In response to such complaints, cell-phone carriers said they’d voluntarily start following procedures to make themselves more consumer- friendly. They include giving all customers two weeks to return new equipment before being locked into a contract.

Carriers unveiled the plan as an alternative to more stringent rules proposed by PUC Commissioner Wood. Citing concerns about what he says are unreasonable cell-phone termination fees, binding contracts that customers don’t understand, and inadequate company response to consumers’ complaints, Wood is trying to persuade the full commission to assume broad regulatory powers over cell-phone service.

In contrast, local phone companies have long had to comply with regulations covering everything from rates and billing to discounts for low-income customers.

Wireless companies are working hard to block passage of Wood’s proposal, partly because California is the biggest cell-phone market in the United States.

It’s also influential in policy-making circles. Other states often look to California laws and regulations as a model, whether it be in telecommunications, health care or other areas. Bob Hirsch, a retiree from Dana Point, says he’s watched the quality of customer service deteriorate over the past two decades. He’s been using cell phones since 1985 and switched carriers several times.

He left Verizon this year because he was unhappy with the quality of the reception here after moving from Las Vegas. As a result, the company billed him $175, saying his contract required him to pay regardless of the reason for canceling.

“They were totally intractable,” he said. “You signed in good faith expecting to be able to use your phone. They refused to acknowledge that.”

After an inquiry from the Register, Verizon dropped that charge. Without intervention, it’s unusual for providers to waive those fees, regardless of the reason, Rosenfield said.

His foundation isn’t the only entity filing lawsuits against cell-phone companies.

A lawsuit filed in February in Los Angeles claims AT&T Wireless used “false and deceptive advertising” to bait customers with one plan, then convince them to buy more expensive ones.

Another suit filed against the company last month charges it’s broken the law by refusing to prorate bills on accounts cancelled in the middle of a billing cycle.

AT&T spokesman Art Navarro declined to comment on the suits, which are making their way through the system.

“As a matter of policy, we don’t comment on pending litigation,” he said. “But as a matter of principle, we make every effort to be open and above-board with our customers. … That’s how we keep their business.”

Quoc Nguyen, 27, of Fullerton says he thinks the company could do a better job taking care of customers. He says he’s had problems with AT&T but is reluctant to switch because of friends who are unhappy with Cingular, Sprint, and T-Mobile.

“If you have bad service and try to get out of your contract, they still charge you,” Nguyen said. “It’s a rip-off.”
Contact the author: (714) 796-6927 or email: [email protected]
The Industry

Consumers love to complain about cell phones, but most Americans can’t live without them. Although wireless companies won’t break down the number of customers in Southern California, most say it’s the fastest-growing major market in the United States.

The industry’s lobbying group, the CTIA, provided the following nationwide data for 2003:

159 million: Cell-phone customers as of Dec. 31

16 million: Number of cell-phone subscribers 10 years ago

$88 billion: Industry’s total revenue

813 billion: Total minutes billed

$49.91: Average monthly bill

3.07 minutes: Average call length

$146 billion: Companies’ investment in cell-phone networks to date

205,629: People employed by the industry

The Big Six:
Here’s how the major carriers stacked up in 2003:

Verizon Wireless
37 million customers
$22.5 billion in revenue

24 million customers
$15.5 billion in revenue

AT&T Wireless
22 million customers
$16.7 billion in revenue

Sprint PCS
20.4 million customers
$12.7 billion in revenue

13.1 million customers
Revenue not available

12.9 million customers
$10.8 billion in revenue

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases