* (With a two-year contract. Fees may apply.)
You know those pesky penalties the cell phone companies impose when you cancel your service before the contract period has expired? How they keep you from switching providers even when the service turns lousy or the competition offers a better deal? Or a better phone? To folks in the biz, those are referred to as Early Termination Fees (ETFs), and they’re back under the FCC’s microscope.
Cell phone companies offer deep discounts on the phone du jour, but only if the customer signs up for a one- or two-year contract, during which the company recoups the subsidy (and more) from monthly charges. Locking the customer into the contract is an ETF that can range up to $350. Worse, the ETF often remains at the full amount up to the last day of the contract period. Customers have complained their company charges the fee even when they move to an area the company doesn’t serve.
Back in December, we reported that the FCC had put Verizon’s ETF in its crosshairs after public outcry moved Congress to act, or to at least to threaten action. The FCC asked about Verizon’s customer notification policy on ETFs: what do the customers know and when do they know it?
Recently, the FCC widened its scope to include AT&T, Google, T-Mobile, Sprint, and another letter to Verizon. The first, Verizon-only, round of questions focused on how the consumer learns about the ETFs. Now the FCC is interested in how the ETFs are calculated, how they are applied to various phones and service plans, whether (and how) ETFs are prorated, and whether it possible for consumers to avoid ETFs altogether.
The companies’ responses are due by February 23, 2010.