Cellphone Contracts: Hard to Get off the Hook
By Kim Hart
Washington Post Staff Writer
Saturday, August 18, 2007; A01
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/17/AR2007081702365_pf.html
Fed up with dropped calls and a string of defective cellphones, Corey
Taylor said he became irate when he learned he'd have to pay $175 to get
out of his long-term contract with Verizon Wireless. So he resorted to a
rather extreme measure. He faked his own death.
After reading on a blog that wireless companies would cancel the contracts
of deceased customers, "I thought, 'What have I got to lose, besides a
cellphone I despise?' " Taylor said. The Chicago consultant fashioned a
fake death certificate and had a friend fax it to Verizon Wireless, his
carrier. He thought he was in the clear -- until the company caught on.
"In the end, I forked over the money," Taylor said. "But I bet I sent a
definite message about how much people hate being strapped to a cellphone
that doesn't work."
Most cellphone owners find themselves committed to two-year service
contracts with wireless companies, facing hefty fees for an early escape.
But as customer satisfaction with these firms continues to slide, consumers
are taking more drastic actions to shed their contracts.
Such desperate attempts are "compelling evidence that the wireless carriers
have failed to address the desires of the market," said Phil Doriot, a
partner with consulting firm CFI Group of Ann Arbor, Mich., which has
studied customer satisfaction for major cellular service providers. "No
other industry could get away with being so inflexible."
Cellular companies charge up to $250 to release customers from a contract,
a stipulation protested by an increasing number of cellphone users.
Consumers filed more complaints about cellphones than any other industry
for the past three years, according to the Council of Better Business
Bureaus; contract issues consistently rank among the top three gripes,
along with billing and service problems.
The number of contract-related complaints received by the Federal
Communications Commission more than doubled from 2003 to 2005. And
thousands of customers were expected to pay to cancel their cellphone
contracts with other service providers this summer after the iPhone was
released exclusively with AT&T service, according to mobile communications
research firm M:Metrics of Seattle.
Sandy Loehman, 27, of Winchester, Va., said she managed to talk her way out
of her Verizon Wireless contract, avoiding the $150 fee by reading the fine
print on her bill. In April, she noticed the price for receiving a text
message from an international carrier had increased 5 cents. Most wireless
companies will cancel a contract for free if a billing change negatively
affects a customer.
"I argued with five customer-service reps and used a lot of big words,"
Loehman said. After she got hold of a supervisor, she threatened to
complain to the FCC, the Better Business Bureau and the state's attorney's
office.
"Eventually, I think they just didn't want to deal with me anymore," she said.
Most carriers offer deep discounts on expensive cellphones to attract
customers. Cancellation fees, they say, help offset those costs.
Some carriers have softened their policies. Verizon Wireless now prorates
its cancellation fees so customers pay less if they are near the end of
their contract. Sprint Nextel lets customers change their service plans up
to six months after they sign their contract. All the major carriers say
they waive cancellation fees for military personnel going abroad and for
customers moving to poor coverage areas, but they ask for proof of the move.
AT&T will take extenuating circumstances, such as losing a job, into
account when dealing with customers, said spokeswoman Alexa Kaufman.
"We try to figure out what it is they're not happy with," she said. "Maybe
the bill's too high and we can offer options to lower it."
Such efforts have not done much to boost customer satisfaction, however. A
recent report by the American Consumer Satisfaction Index showed that,
despite modest improvements, the wireless industry still ranks far below
fast-food restaurants and airlines. Poor customer service is the No. 1
reason customers switch to another carrier, according to a CFI Group report
released this month. Doriot, an author of the CFI report, said frustration
over contract terms is especially harmful for carriers now that competition
for new customers is so fierce.
"When cellphone companies charge consumers fat penalties to leave, they're
throwing sand in the gears of competition, which means consumers pay higher
prices for shoddy service," said Chris Murray of Consumers Union, which has
been lobbying against cancellation fees.
Consumer lawsuits in several states, including California and Florida, have
challenged the fees as unfair and illegal because they punish customers for
moving to another service provider. Wireless carriers have asked the FCC to
treat the fees not as penalties but as rates companies can charge for
service. Several members of Congress have expressed concern over the fees,
and some have said they plan to introduce legislation this fall that would
give states more authority to regulate the fees.
"It's amazing how many people really resent being locked into a contract,"
said Craig Wurtenberg, co-founder of CellTradeUSA.com, a Web site that
matches people wanting to get rid of the remaining time on their contract
with people looking for shorter cellphone commitments. Wireless companies
release customers from their contracts if they transfer the remaining time
to someone else.
Traffic on the site, which typically lists requests from about 2,000 people
wanting to unload their contracts, increased more than 30 percent when the
iPhone hit store shelves in June.
Another site, CellSwapper.com, often sees a surge of people trying to
escape contracts when a cool new phone comes out, said chief executive Adam
Korbl.
The iPhone requires a two-year contract with AT&T, although the $500 phone
does not come with a discount. But Al Chang, a consultant from Berkeley,
Calif., found a way to reduce the pain of a cancellation fee.
Before the iPhone was released, Chang, 37, signed up for a two-year
contract with AT&T with the purchase of a Blackberry for a discounted price
of $150. He turned around and sold the device online for $350, and then
bought an iPhone.
"That way, I have $200 in my pocket -- so if I ever do want to cancel, I
haven't lost any money on the deal," he said. "I think I actually made a
profit."
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
