Phone Carriers Want Smaller Cancelation Fees, But There’s A Catch
By Dee Chisamera
12:24, May 22nd 2008
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Phone Carriers Want Smaller Cancelation Fees, But There’s A Catch

Consumer advocates expressed their disagreement with a wireless industry proposal that has been submitted to the Federal Communications Commission’s analysis, in which wireless carriers demanded the regulation of early termination fees, the Associated Press reports. If approved, customers would be granted 30 days after they sign a cell phone contract or 10 days after they receive their first bill to cancel the agreement with the service provider.

However, if at a first glance everything seems to be in the favor of the consumer, there is another side to the story, which is why consumer advocates contest the proposal: if approved, the cell phone companies would escape the multimillion dollar lawsuits filed against them by unhappy consumers, and that is something consumer advocates cannot accept. That would be similar to granting cell phone carriers a “get-out-of-court free card,” Chris Murray, senior counsel for Consumers Union, the nonprofit publisher of Consumer Reports Magazine, told AP.

Customers are now charged around 200$ for early cancelation of the contract, but under this proposal, they would have 30 days after they sign the contract to reconsider the deal, with no penalty involved. Furthermore, phone companies would have to reduce fees depending on how long the customer has been in a contract (the longer the contract stays valid, the lower the terminating fees).

Cell phone companies said they apply cancelation fees in order to recover the cost of cell phones, which they subsidize under long-term contracts. However, consumers have complained of large fees, saying the carriers use them in order to discourage customers from switching to another carrier. Phone companies have been sued multiple times for applying what consumers call “unreasonable fees.”

 



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