Out of pocket
John's groused before on this blog about the challenges that come with a cell phone contract. Well, here's another one: Early termination fees.
Last month, the U.S. Public Interest Research Group, a national advocacy organization, released survey results showing that 36 percent of respondents would have switched cell phone companies if not for early termination fees, flat penalties of between $150 and $240 per phone lobbed at consumers who try to get out before their contracts are up.
The cell phone companies frame these fees as another part of their rate structures, but 89 percent of consumers surveyed thought of the fees as penalties implemented to discourage switching between cell companies.
The survey of 1,000 U.S. households found that nearly half of cell phone users would at least consider switching providers if the fees were eliminated. The interesting thing about these early termination fees is that they apply to consumers who have been with the company for five years at the same price as they apply to those who have used the company's service for two months.
Some consumer groups, including Consumers Union, the nonprofit publisher of Consumer Reports, think these fees should be pro-rated to be fairer to the customer. The publisher also has advocated for an evaluation period during which consumers can test drive their phones, if you will. That, the publisher says, would allow customers to determine whether a phone works in all necessary locations at the promised level of quality.
The Public Interest Research Group takes a harder stance, lobbying for cell companies to eliminate these fees completely.
Experts advise that, before you purchase a cell phone, you take a hard look at the company's service contract and the penalties you could incur for early termination. You also should understand the fees you could be charged for tweaking your service in the middle of a billing cycle.
Consumers Union offers news updates and fairly user-friendly information about wireless communications and grappling with cell phones.