Early Termination Fees of Wireless Phone Contracts

Service industries such as mobile phone phone service and subscription television commonly have termination fees or early termination fees (ETFs) as they are more commonly known. However, the imposition of these fees have been criticized by consumer interest groups. These fees prevent users from migrating to superior services so they are labeled as being anti-competitive.

The process usually works this way. A person purchases cellular phone service from a particular wireless carrier. He or she might be required to sign a two-year contract in order to avail of the service. Now that contract might stipulate a $200 fee in the event that the customer breaks the contract or wants to opt out of it.

The clamor and the disputes about the unfairness of early termination fees in wireless phone contracts have lead to positive changes. Verizon wireless was the first carrier to give in when it announced that it will prorate it's early termination fee. AT&T followed Verizon's lead and other carriers namely, T-Mobile and Sprint, have also decided that they would begin prorating their ETF in the first half of next year.

Now, what does a prorated early termination fee entail? The customer will still have a to pay a fee for ending the contract abruptly. However, the amount will decrease as the decision to end the contract early gets closer to the contract end date. This means that a customer will no longer be forced to pay the original fee if he decides to end the contract.

Here's a list of the current termination fee for each major wireless carrier:

Alltel: $200 per phone line

AT&T: Prorated

Sprint: $200 per phone line (to be prorated next year)

T-Mobile: $200 per phone line (to be prorated next year)

Verizon: Prorated

So far, Alltel has not made any announcements on making it's ETF prorated. However, it may lose customers if it remains as the only carrier to have a non prorated early termination fee next year. It would be logical to assume that the company will also follow the examples of other wireless networks to keep their consumers happy.

The Discover Bank Decision and Wireless Phone Contract Disputes

About a couple of years ago, the California Supreme Court issued a decision that has a significant impact on wireless phone contracts. This decision was well anticipated because of the increasing number of wireless contract disputes.

The case was widely known as Discover Bank v. Superior Court resulted in a decision that class action and class arbitration waiver clauses in consumer contracts are not enforceable "at least under some circumstances.” With this decision a window of opportunity for the use and enforcement of class action and class arbitration waiver clauses in the employment context was opened.


Case Background

Let us explore the events behind this ground breaking decision.

The case was all about a credit card holder filing a class action claim against Discover Bank in California. The person accused the bank of imposing a late fee of $29 on payments that were received on the payment due date, but after the bank's undisclosed 1:00 p.m. “cut off” time therefore breaching the cardholder agreement.

In response to this accusation, the accused moved to compel arbitration on an individual basis and to dismiss the class action. The bank argued that class arbitration and class actions are expressly prohibited in the arbitration provision of the cardholder agreement. It also contained of law clause stating that Delaware law governed.

However, the plaintiff argued that the class action/arbitration waiver clause, as stated in the cardholder agreement, is unenforceable under California law because it was unconscionable.


The Impact

The decision strike down the class action/arbitration waiver clause in the Discover Bank case may have nationwide implications. The presiding also noted that California could now become a magnet for class actions because the majority decided to ignore the choice of law provision in the arbitration agreement.

The decision can also affect the contracts of wireless phone service providers because these contracts requires the customer to accept a form of class action waiver. Take a look at this condition in Sprint's Terms and Conditions:

We each agree not to pursue arbitration on a classwide basis. We each agree that any arbitration will be solely between you and us (not brought on behalf of or together with another individual's claim). If for any reason any court or arbitrator holds that this restriction is unconscionable or unenforceable, then our agreement to arbitrate doesn't apply and the dispute must be brought in court.

It's clear that the Discover Bank decision has affected the formation of this condition. The discover bank decision was also applied in a contract dispute between a customer and a wireless phone carrier. The California Federal Court denied the motion to compel arbitration under the agreement barring class action lawsuits made because the clause was held unconscionable. The motion was made by the defense in the Winig v. Cingular Wireless-Class Action Defense cases.

Changes to Sprint's Monthly Fees

Wireless company, Sprint will be changing some of the fees it charges its customers. Some sources say that it is the result of because of legal pressure for their alleged long-standing and industry-wide practice of misleading consumers into thinking certain fees are government mandated.

The company's phone and data customers will receive notices that will inform them that three fees from their bills will be removed. The Federal Programs Cost Recovery (FPCR) fee, the Federal E911 surcharge and the Wireless Local Number Portability (WLNP) will no longer be charged next year.

However, these charges may also be replaced. An Administrative Charge and a Regulatory Charge will be the replacement of the fees to be removed next year. This statement from Sprint's notice explains these changes:

"Sprint Nextel is charging the Administrative Charge to help defray various costs imposed on us by other telecommunications carriers, including, but not limited to, charges imposed by local telephone companies for delivery of calls from our customers to their landline customers and for certain network facilities and services we must purchase from them. The Regulatory Charge is being assessed to help defray the costs of various federal, state, and local regulatory programs. These charges are not taxes and are not amounts we are required to collect from you."

Many analyst comments that these changes are indeed a response to criticism that Sprint have been masking these fees as being required by the government. There may be truth to this analysis since Missouri's Attorney General sued the company for for misleading consumers into thinking these fees are government mandated about five years ago. As of now, the case has not been settled.

The important thing is that the consumer will have less fees to pay and will not be anymore lead to believe that they are paying for taxes or any government fees. Maybe these changes will also be rereflected in the company's contracts or temrs and conditions in the near future.

Wireless Phone Contracts and Privacy (Part Two)

This is the second part of my post about the privacy policy of major wireless phone service carriers.

In the first part I gave some information about the policies of Alltell, AT&T and Sprint Nextel on the issue of privacy. I also talked about the Customer Proprietary Network Information, or CPNI. This term refers to the information collected from you that is made available your carrier solely by virtue of their relationship with you. This information includes the quantity, technical configuration, type, destination, and amount of your use of the telecommunications services you purchased.

Now let's proceed with the remaining major carriers that were not included in the previous post. Let's take a look at what T-Mobile has to say about their customer's privacy:

Wireless systems use radios to transmit communications over a complex network. We do not guarantee that your communications using the Service or Products will be private or secure, and we are not liable to you for any lack of privacy or security you may experience. You are responsible for taking precautions and providing security measures best suited for your situation and intended use of the Service. We may (but are not required to) monitor, intercept, and disclose your transmissions, location or communications and may disclose your billing, account, calling records, or other information, in good faith reliance on legal process, if required by law or to protect our rights, business, network or customers. We may locate you through our network. Your caller identification (such as your name and Number) even if unlisted may be displayed to others (for example, on the equipment or bill of the person receiving your call or any Internet site you visit.) We may list your name, address, and Number in a published directory with your consent. The way third parties handle and use your personal information is governed by their policies and we are not responsible for their policies, or their compliance with them.

T-Mobile is giving the customer the responsibility of taking precautions when using their device which is perfectly fair in my view. Being careful when using a mobile phone is always a good idea. They may also reveal gather information about you if the law requires it. However, they also stress that they have no control over how third parties may handle your personal information. You can visit www.t-mobile.com/privacy to get in depth info about their privacy policies.

Now let's proceed to US Cellular's policies on Privacy. The Customer Service Agreement of US Cellular states that they may, " release information about you or your account when required by a subpoena or other lawful process. We will not provide you with notice of such requests." I think that their statement is very clear.. unless you have some trouble with the law then you can be sure that your personal information is safe.

US Cellular also reassures their customers that the company is dedicated to providing superior customer satisfaction and is committed to protecting customer privacy. They will take this responsibility seriously as a key component to earning and maintaining their customers’ trust. US Cellular's associates adhere to a Code of Business Conduct that supports our commitment to protecting customer privacy. This is pretty reassuring piece of info. You can find the company's policies and practices pertaining to the use and protection of customer information at their website's Privacy policy page.

Now let's wrap this up by checking out Verizon Wireless' privacy policy. The company's Customer Agreement states that,

We may use and share information about you and how you use the services: (a) so we can provide our goods or services; (b) so others can provide goods or services to us, or to you on our behalf; (c) so we or our affiliates can communicate with you about goods or services that any of us offer (although you can call us any time if you don't want us to do this); (d) to protect ourselves; or (e) as required by law, legal process, or exigent circumstances. In addition, we may include our own or third-party advertising in the services you've purchased from us, and we may share information about you with affiliates, vendors and third parties to, in addition to the above reasons, deliver relevant advertising to you while using the services. We may collect and transmit information regarding your use of the services through applications or other software present on your device. If you do not want us to collect, transmit or use such information about you for the above purposes, you should not use the services; by using the services, you expressly authorize us to use your information for these purposes.

Verizon may collect information about their users and reveal them to third parties for several reasons including requirement by law. They also stress that the customer may choose not to use the services if these conditions prove to be unfavorable or violate the user's privacy.

I hope that I provided some insights and information on the privacy policy of various wireless service providers. I think that it's always good to research and compare options to find the most appropriate choice. Hopefully, you can find a service that will give the best protection of your personal information or privacy.

Wireless Phone Contracts and Privacy (Part One)

Privacy is one of the most important issues that should be considered when you are considering signing a mobile phone contract. You have to know that you're carrier will be able to protect your privacy and ensure that your calls are safe.

Let us look at some wireless phone contracts and examine some the conditions that deal with the issue of privacy. However, I thinks that it's important to examine a privacy term that is used in some of these contracts. I found that the Customer Proprietary Network Information, or CPNI is a term that is being used in these agreements.

CPNI or Customer Proprietary Network Information refers to the information collected from you that is made available your carrier solely by virtue of their relationship with you. This information includes the quantity, technical configuration, type, destination, and amount of your use of the telecommunications services you purchased.

Now that you have an idea about CPNI let's proceed to what the carriers say about it. Let us begin with Alltel's privacy policy. Their terms and conditions states that,

You authorize us to monitor and record communications to us regarding your account or the Services for purposes of quality assurance. We will not give you notice of any subpoenas or court orders related to your account or use of Services unless required by law. Information in our billing and customer care systems concerning your account and your use of Services belongs to us, and you have no expectation of privacy with respect to such information. You agree that we may release information we have about you when required to do so by law, to provide to third parties solely for the purpose of assisting us in providing any Service to you, or if we reasonably believe that an emergency involving immediate harm to a person or property requires disclosure. We may analyze your account and usage information and share this information with other Alltel entities to communicate with you regarding Equipment or Services that may become available to you. If you do not want us to provide your information to other Alltel entities for this purpose, please notify us.

If you are an Alltell subscriber, then you should remember that unless required by law, your carrier will not send you any information about any subpoenas or court orders related to your account or use of Services. Your carrier also gives you the option of resfusing them the right to analyze your account and usage information and share it with other Alltel entities to communicate with you regarding Equipment or Services.

Let us take a look at AT&T's take on consumer privacy. Now the thing with ATT is that they have merged with Cingular. They are currently updating their privacy policies as they continue to consolidate and re-brand the company from Cingular to AT&T. As of now, the Cingular privacy policy continues to apply to wireless services provided by AT&T. OK, now on to the policy. AT&T's privacy policy states that,

We will not sell or disclose your personal information to unaffiliated third parties without your consent except as otherwise provided in this Policy. We may use information about who you are, where and when you browse on the Web, where your wireless device is located, and how you use our network to provide you better service and enrich your user experience when you sign up or use any of our products or services.

This means that your consent is needed to allow AT&T to provide third parties with info about you. Now this is just a piece of their policy and I will not dwell on it too long because it is still under revision to cope with the Cingular merger. Tune in to AT&T if you want the latest on their privacy policy.

Let us move on to Sprint Nextel's stance on the issue of consumer privacy. According to their website, their company is

"committed to protecting the privacy of our customers. We only disclose customer information when necessary to comply with the law. We also have a variety of safeguards in place that protect against unauthorized access to our systems.

Your privacy is safe with this company except if the law requires information about you. You will also bebnfit from the safe guards that the company installed to preserve and protect your private and personal information. However, you have to remember thatCustomer Care contact information differs between customers served on Sprint systems and Nextel systems. You might want to check out Privacy at Sprint and Nextel to get more information about this topic.

I'm going to explore the privacy policies of other wireless service providers in my next post. I hoped I provided you with valuable info and links that will lead you to the data you seek.

Play Dead to Escape your Wireless Phone Contract

If you've signed up for a wireless phone contract and found it inappropriate for your life style, then you would probably want to get rid of it. However, you might be required to cough up a couple of hundred bucks to pay for a contract termination. A man found a simple solution to become free of his wireless contract contract. He simply staged his own death.

This solution seems logical enough. Wireless phone contracts will release a signer in the event of his or her own death. Apparently this person had experienced a lot of dropped and defective calls over the years. After paying large sums of money he wanted to close his contract without paying more money. He crafted a fake death certificate and asked a friend to fax it to his service provider's customer service. Unfortunately, the plan failed because the company caught on the forgery. The company decide to close his contract after they forced forced him to pay the termination fee.

Frustration and dissatisfaction can often be experience by those who sign long term contracts. they often feel that carriers do not provide top quality services and products. They are also unhappy with the fact that they are hooked to a service that no longer satisfies them and are required to pay a termination if they want to end their service. As a result, weird ideas may form in some subscribers minds.

In the past few years, unhappy contract subscribers have filed increasing about their lon term contracts. There have even been hearing s in congress to address these complains and any possible abuse form wireless service providers. A bill was also proposed to protect consumers from possible abuse from wireless contracts. In response to these hearings and complaints, the wireless companies have started to make changes.

The tight competition between them triggered the development of programs that would provide the best customer satisfaction. customer satisfaction is a great attraction for consumers who are bombarded by different wireless product offers.

Wireless companies have also made their contracts flexible and have allowed consumers to change their contract or pay a pro-rated termination fee instead of the fixed fee. A couple of top wireless service providers have also made announcement to open their networks to outside devices. Perhaps if these changes become more come, unsatisfied costumers will no longer come up with crazy ideas to escape their wireless contracts.

Wireless Phone Contract Disputes

There seems to have been an increase of contract disputes when it comes to mobile phone plans. Customers have began to question some of the conditions of their wireless contract and the contracts have responded to their demands.

One of the ways carriers have used to settle disputes is by making or changing contract conditions that deal with possible contract disputes. The contracts or terms and conditions of wireless service providers now have passages that are aimed towards dispute resolution. Take a look at this section from Verizon's Customer agreement,

WE EACH AGREE TO SETTLE DISPUTES (EXCEPT CERTAIN SMALL CLAIMS) ONLY BY ARBITRATION. THERE'S NO JUDGE OR JURY IN ARBITRATION, AND REVIEW IS LIMITED, BUT AN ARBITRATOR CAN AWARD THE SAME DAMAGES AND RELIEF, AND MUST HONOR THE SAME LIMITATIONS IN THIS AGREEMENT, AS A COURT WOULD. IF AN APPLICABLE STATUTE PROVIDES FOR AN AWARD OF ATTORNEY'S FEES, AN ARBITRATOR CAN AWARD THEM TOO.

This section is just the introduction. You can read the rest of the Customer Agreement if you want to learn more. Maybe the alarming number of court cases questioning a wireless carrier's right to block consumers from suing or filing class-action claims has triggered this changes in the contracts.

Earlier this year, an appeals courtin California reaffirmed a lower court's order that a wireless phone service carrier could not enforce a clause requiring arbitration of disputes with customers. AT&T's prohibition against subscribers banding together in class actions was also ruled unenforceable by the U.S. Court of Appeals for the Ninth Circuit in California.Judge Stephen Reinhardt wrote:

"In this case, we consider whether a class arbitration waiver in New Cingular Wireless Service Inc.'s standard contract for cellular phone services is unconscionable under California law, and whether the Federal Arbitration Act preempts a holding that the waiver is unenforceable. We hold that the waiver is unconscionable, and, thus, unenforceable, and that the invalidation of the contract provision is not preempted by the Federal Arbitration Act. Accordingly, we reverse the district court's order compelling arbitration."

The holes in the contract language, which generally seeks to steer every dispute away from court and into arbitration have exposed by these lawsuits. A landmark 2005 ruling in a California court, known as the Discover Bank decision has also proven useful in these lawsuits. The decision states that which allows class actions to proceed under certain conditions even when such suits are prohibited by a contract.

These disputes also brought about some positive changes in the contracts and the carriers attitude towards customer satisfaction. Some carriers have altered their contract to provide more freedom for their customers and some have announced programs that will keep their customers happy and satisfied with their services. Hopefully, these conflict will result in more positive changes and provide balance in the relationship between wireless service providers and customers.

Wireless Contract Tips and More

The wireless phone industry is probably the fastest growing sector in today's business world. In the span of a few years, it has become a normal part of our daily lives. Almost everyone owns a cell phone and use them as the primary tool for communicating with people and friends that are out of reach.

The growth of this industry has been enormous. There are now countless choices when it comes to cellphone models, plans, contracts and service providers. The normal wireless phone customer is constantly being bombarded by new phones, plans, features and other information.
Let me give you some tips on how to choose the contract features and other aspects of the modern wireless phone.

Modern cellphones have a lot more features than the early models so choosing the ones that fit your lifestyle can be confusing. Nowadays the features range from simple and functional to complicated ones. The important thing that you have to remember when dealing with features is that buying anything more than you will use is a mistake.

It would be practical and smart to stick with the basic features if you want to use your phone for making calls most of the time. On the other hand, a high end or latest model wireless phone would be best if you want to use your mobile for e-mail or multi-tasking. You can also choose a phone with a camera and plenty of games if you want to get some entertainment out of your wireless phone.

Let's move on to wireless plans and contracts that are offered in wide variety by wireless service providers. You have to think carefully about how much you'll actually be using your phone before you go about choosing a plan. Your cellular phone contract should be based on your projected usage time. The money you will dish out will depend on how much time you use up so choosing a plan or contract that provides the most suitable number of minutes is crucial. You're usually better off overestimating the number of plan minutes you'll need rather than paying extra, expensive airtime charges.

It is also important to think about the time that you'll be making most of your calls. Nowadays, carriers would only charge for calls made during peak periods. The peak periods are usually at Monday through Friday between 7 a.m. and 9 p.m. Calls made during the weekends, nights, and holidays, are usually free and are considered unlimited anytime minutes. There are also plans or contracts that do not charge calls made to other cell phones on a carrier's network.

Remember to to find out if checking your voicemail, incoming and outgoing calls count toward unlimited anytime minutes. You need to weight everything before you make a decision. Compare plans to find out which one will work best with your budget and lifestyle.

You have to consider several things before you sign on the dotted line of a cellular phone contract. For example, you should verify the unlimited anytime minutes you have and what kind of calls count toward them. You also have to get information about roaming, overtime, and extra charges.

A cellular phone contract nationwide plan with free long distance will be very useful if you spend most of your time traveling or have friends and relatives in far off places. This means that you also need to know where your local calling area begins and ends.

Wireless service contracts usually last for a year or two so you need to have a clear grasp of and this commitment and how much it will cost you to break it. In recent years, service providers have softened their stance on ending contracts so you should do research about your options.

In my opinion, the key is to make sure you know how everything works before you sign any cellular phone contract. This way there will be no unpleasant surprises and your relationship with your wireless service provider will be smooth and full of satisfaction.