Lose Your Cellphone, Kiss Your Credit Rating Goodbye

Published on

Buried in a slew of
last-minute vetoes by Arnold over the weekend was SB440 by Sen. Jackie
Speier, which would have protected Californians whose cell phones are
lost or stolen from being forced to pay up to thousands of dollars for
fraudulent calls.

The measure was opposed primarily by cell phone companies, including
Cingular, T-Mobile, Sprint Nextel and Verizon. These companies and
their merger partners have given Arnold at least $376,000 in campaign

Arnold said in his veto message that the state is already protecting
consumers from such payment demands. If that’s the case, why would cell
phone companies still tell people calling to report a stolen phone that
they are liable for any charges made before the theft was reported?
What if you’re on vacation and it’s stolen from your home?

Current law is hazy, saying that users are liable only for calls they
made or authorized. Cell phone companies have interpreted this to mean
that any call made from the phone before the owner reports a loss or
theft is legally authorized.

In one instance cited by legislative analysts, a Cingular customer went
on an overseas vacation last year and believed she left the phone in
her apartment. When she returned three weeks later she discovered the
phone missing. A week after that, she was notified that there were
$26,000 in charges on the phone, up from her usual $50 a month — and
she was responsible for paying them despite the theft. She contacted
Cingular repeatedly and was told, among other things, that she should
consider filing for bankruptcy. Late charges piled up, she got calls
from a collection agency and her credit rating was threatened, she said
in a CBS TV interview (When CBS called Cingular, the company backed off
its demand).

In another instance, a customer reported her phone stolen one day after
the apparent theft. Several days later, her company told her she had
$1,700 in charges on the phone and was liable for all charges made
before she reported the theft.

SB440 would have specifically allowed customers to offer evidence that
the calls were not authorized, and prohibited cell phone companies from
demanding payment, sending the bills to collection, or reporting
nonpayment to credit bureaus until an investigation of the disputed
calls was completed. The companies would also have to make these rights
clear in their bills to customers. Arnold said that printing these
words on the bill would be a "great undue burden" on the companies.

Not surprisingly, the Gov vetoed the bill on Saturday, at a time when
few people were paying attention and at the final moment for such

While cell phone companies showered the Gov with cash, Consumers Union
and State Atty. Gen. Bill Lockyer, the chief backers of the bill, lost
out because they merely offered a strong argument for the rights of
cell phone customers. In Arnold’s world of pay-to-play politics, a good
idea doesn’t stack up against a big check.

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
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