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Sen. Klobuchar Seeks "Bill of Rights" for Cell Phone Consumers

September 17, 2007

Golden Valley, MN - Saying that cell phone subscribers deserve a consumer “bill of rights” to restrict excessive charges and ensure better service, U.S. Senator Amy Klobuchar convened a forum this morning on consumer protection in the cell phone industry.  The forum was held at the Golden Valley City Hall.

Earlier this month, Klobuchar introduced the Cell Phone Consumer Empowerment Act of 2007 aimed at empowering the 200 million cell phone customers nationwide to make informed choices about wireless service that best fits their needs and budget.

Klobuchar serves on the Senate Commerce Committee, which has jurisdiction over telecommunications issues.

Klobuchar was joined at today’s forum by several state and national consumer advocates, including Mary Olson, State Senator from Bemidji; Brita Sailer, State Representative from Park Rapids; Anne Boyle, Nebraska Public Service Commissioner and Board Member of the National Association of Regulatory Utility Commissioners; and Prentiss Cox, a University of Minnesota law professor and consumer protection expert.

The Cell Phone Consumer Empowerment Act of 2007 will require wireless service providers to share simple, clear information on their services and charges with customers before they enter into long-term contracts.  The legislation will also provide greater flexibility for consumers in cancelling service contracts

In particular, the legislation targets unreasonable Early Termination Fees that are imposed on consumers who cancel their contracts.  Most cell phone subscribers are in long-term, multiyear service contracts with their providers.  If they try to cancel the contract, they are required to pay special fees that can run into hundreds of dollars.

“The marketplace is supposed to provide consumers with freedom of choice,” said Klobuchar.  “With cell phone service, it can seem more like indentured servitude.”

Klobuchar said her legislation will set reasonable limits on these Early Termination Fees, requiring that wireless providers pro-rate these fees based on how long the consumer has had the service before cancelling the contract.  For example, a consumer who exits a two-year contract after the end of the first year would have to pay only half of the Early Termination Fee. 

“The overriding purpose of this cell phone consumer ‘bill of rights’ is to modernize the rules governing this powerful industry to ensure that consumers are getting a fair deal in the marketplace,” said Klobuchar.  “The rules that applied at the infancy of cellular business are no longer relevant for what has become a powerful, multibillion-dollar industry.  Cell phones are now a Main Street technology, and it’s time that they are ruled by some mainstream, consumer-friendly values.”

Under the Cell Phone Consumer Empowerment Act, consumers will have a right to:

- Limited, pro-rated “Early Termination Fees.” 
 
- Detailed service area maps and disclosure of dropped calls and coverage gaps.

- Full disclosure of all contract terms and conditions.

- Initial 30 days to cancel contract without penalty and for any reason.

- Itemized bills with no unauthorized fees or charges.

- Point-of-sale notice of any contract extension, with right to cancel within 30 days.

- Written 30-day notice of any change in rates or terms.

- Opportunity to cancel contract without penalty if being deployed overseas for U.S. military service.

The legislation also calls on the Federal Communications Commission to study the impact of the industry practice of “locking” phones, which makes them exclusive to one service provider and requires consumers to purchase a new phone when changing carriers.

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