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Klobuchar Demands Action from Cell Phone Companies on Fair Consumer Fees

Company promises are unfulfilled after four months

March 12, 2008

Washington, D.C. – U.S. Senator Amy Klobuchar today demanded that three of the nation’s largest cell phone companies take action to pro-rate the Early Termination Fees to help cell phone customers. Pro-rating such fees is seen as an important step to improve freedom of choice for consumers who find that their cell phone provider is not meeting their needs or expectations.

“Early Termination Fees have been a real sore spot for consumers,’’ Klobuchar said. “Too often, consumers find out only after committing to a multi-year contract that their wireless service doesn’t meet their needs. That realization comes after it’s too late to exit their contracts without paying excessive penalties.’’

Klobuchar, who serves on the Senate Commerce Committee, introduced legislation last year – the Cell Phone Consumer Empowerment Act – that would encourage fairness, transparency and quality service in the wireless market. Among other pro-consumer measures, the bill would require wireless carriers to pro-rate their Early Termination Fees so that, at a minimum, a consumer exiting a two-year contract after the end of the first year would have to pay only half the termination fee.

Most wireless providers have not pro-rated the fees in the past, but Sprint, T-Mobile and AT&T announced in late 2007 that they would take such action. AT&T even announced its plan to pro-rate fees on the day before the Commerce Committee held a hearing last October on consumer and competition issues in the cell phone industry.

In a letter Wednesday to the top executives of Sprint, AT&T and T-Mobile, Klobuchar told the companies that they must provide assurances that they will in fact begin pro-rating their fees – or if the companies have withdrawn those promises, to explain why.

“It is time for the wireless companies to adhere to the assurances they made to the American consumer and start pro-rating these fees,’’ Klobuchar said.

Approximately 250 million American consumers now have cell phones, and many of those consumers are subject to Early Termination Fees as high as $200 for leaving their contracts early.  Consumers Union, the independent national consumers’ organization, recently reported that cell phone companies ranked 18th out of 20 industries for consumer satisfaction in its annual survey of consumer sentiment.

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