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CELL PHONE SERVICE: CUTTING THE CORD CAN TIE US UP

When Lori Swanson first became Attorney General, the United States was embroiled in two wars with large numbers of military personnel posted overseas.  In World War II, the country adopted the Soldiers and Sailors Relief Act. The Act postponed most civil lawsuits until the soldier returned from service.  The Act deferred most proceedings involving breach of contract, bankruptcy, foreclosure or divorce.  This meant that a G.I., who was paid substantially less than market salary, didn’t have to be distracted in war due to litigation.  


Unfortunately, the Act doesn’t necessarily cover service contracts.  In 1940, there were few service contracts involving a family. By 2000, service contracts were the most prevalent contract, involving cellphones, internet service, telephone contracts, sports clubs, membership contracts and the like.  Responding to service members’ concerns, Lori contacted the service providers and requested that they honor the spirit of the Serviceman’s Act and defer such action.  Many of the companies declined, so Swanson authored and got enacted a bill to require such deference for those in active duty.


The indifference of communication providers to servicemembers carried over to the general public.  When it comes to broadband, the internet, telephone service, and cellular technology, there is not a lot of difference in the product that is understood by the average consumer.  The result is that companies may market their product at a reduced rate and thereafter change the terms or pad the bill with extra trimmings once the sale is completed. And, because the cost of the technology tends to decrease with time, the companies do their best to automatically renew old contracts, in many cases exposing the consumer to additional undisclosed termination fees.  


For instance, one “hidden fee” on a cable bill is equipment rental for the cable modem or cable box.  While the consumer may pay a rental fee that exceeds $100 per year for the modem, in fact the purchase of a new modem is generally less than $100. 

 

There is a lot of competition between cable, wireless and broadband companies to retain customers.  Swanson determined that Sprint, one wireless company, locked people into contracts and then charged them early termination fees of $400 when they tried to cancel.  Customers were not always advised that by agreeing to an “offer,” they agreed to pay such a termination fee if they cancelled within a certain period of time. In some cases, the consumers had contracted with the company for over six years, long past the termination date in the original contract. When they tried to shop around for a competitive rate months later, they were advised of a $400 termination fee. 


Swanson filed a lawsuit against Sprint in September of 2007, claiming that the company violated consumer laws by not providing sufficient disclosure before extending a contract and its termination fee.  In 2009 the matter settled, with Sprint agreeing not to impose a termination fee, and further to refund the paid termination fee where the consumer stated that they were not aware that the termination period was extended.  


As with other commercial disputes, the resolution of the Sprit matter induced its competitors, AT&T Verizon and T-Mobile, to similarly recognize the need to address the termination fee problem. 


In 2017, Swanson again encountered a barrage of consumer complaints, this time with Century Link.  In May of 2017, Swanson filed a lawsuit, pointing to experiences where the customer was given one quote for a base monthly fee but then charged up to double the amount when the bill arrived.  In discovery, Swanson found records quoting CenturyLink’s own employees who claimed they received many complaints and less than one in five customers were given an accurate quote.  In October of 2017 CenturyLink agreed to a consent order regarding future price quotes.  As to refunds, the litigation remained pending at the time Swanson left office. 


https://consumerist.com/2017/07/13/lawsuit-claims-centurylink-continuously-offers-bogus-price-quotes/


Attachments:

Settlement documents with Sprint

Complaint filed against Century Link