Wednesday, August 08, 2007

Did You Know That Cell Phone Companies Can Extend Your Contract Without Your Knowledge?

Actually, without your EXPLICIT knowledge. However, according to a report by MSNBC's Red Tape Chronicles posted on August 7th, 2007, cell phone companies can use ANY verbal exchange between yourself and the company as implicit permission to extend your contract without EXPLICITLY informing you of it or giving you an opportunity to decline, even if the conversation has nothing to do with contract extension. And who does it? Maybe the better question is "Who doesn't do it"? Based on comments posted after the report, it appears the only company who doesn't do it is U.S. Cellular. Click HERE for the entire report including video; transcript posted below:


When Chris McCann switched cell phone companies, he thought he was free of his original contract. But then he and his wife were hit with a $200 early termination fee. Why? His two-year contract had been quielty extended an extra year.

McCann: We had no paperwork. We had no signatures. We had nothing from them indicating we had ever done anything to extend our contract beyond the original two-year obligation that we had.

What happened to Chris? Let's go to the Gotcha Room.

Gotcha Room: It might not seem right but it is how they do business. Cell phone companies can extend your contract without you ever signing anything. Say you call up your cell phone company and you ask for more minutes or just an address to mail a check. You might find your contract has just been extended another two years.

The key to changing providers without paying an early termination fee is knowing when your contract is up. But that's easier said then done. Especially when contracts are extended without your knowledge.

McCann: They never send you anything in writing. It never appears on your bill. You really have no way of knowing unless you call them and specifically ask. And even if you do ask they seem to be a bit evasive in trying to answer the question.

Want to avoid this kind of surprise? End every call or visit with your cell phone company by saying clearly you do not authorize any contract extensions.

And this is actually the second time Red Tape Chronicles has reported on this problem. Back on July 17th, they reported on the trials and tribulations of the Siebeneck family in Utah with Sprint. Yon-Paul Siebeneck of Salt Lake City went shopping in a Sprint store in the fall of 2006 and was allegedly told that both his family cell phone contracts would expire on November 30th, 2006. His wife, Chris, even called Sprint to double-check. Believing they were both cell phone free agents, on December 14th he purchased two new phones from a rival cell phone firm and canceled his Sprint phones.

But in January 2007, surprise, surprise! He received a Sprint bill for more than $300. Sprint now informed Siebeneck that his two contracts were in force until the end of January. So after paying for nearly 23 months on two two-year contracts, Siebeneck was now stuck two early termination fees of $150 each. Adding insult to injury, taxes were applied to early termination fees, so the total bill was almost $340. When Siebeneck contested the charges, Sprint turned it over to a collection agency, who started harassing him forthwith.

A spokesman for Sprint told Red Tape Chronicles that all necessary procedures were followed prior to assessing the charges, but because of "privacy" considerations, would not give further information.

The Red Tape Chronicles offers suggestions on how customer can fight such charges. First, the Fair Debt Collection Practices Act offers several helpful provisions. Consumers can contact the debt collector in writing and instruct it to cease all contact. After that, other than specific notices of legal action, the collector must stop harassing the consumer. More detail on how that law works are offered at the FTC's Web site. The letter should also tell the debt collector that the bill is in dispute and ask for any evidence the firm has of the debt.

The next step is to contact the credit bureaus and dispute the negative entry in your credit report and ask for a "reinvestigation." That begins a legal process which can at least stall the negative impact of the unpaid bill. Reinvestigations can be initiated online with Experian, Equifax, and Trans Union.

Third, ask the provider for evidence that you agreed to a contract extension, including copies of telephone call recordings. The provider may not be able to produce the evidence, which would bolster any potential legal case; or the provider may decide producing the paperwork is too much trouble, and abandon the case.

A number of public comments add depth and insight to this story. Here are a helpful sampling of comments from the August 7th story:

Answer: Prepaid cell phone using cash.No contract, and no contact with the company. No credit card involved. Reup your minutes over the phone. You only pay for what you use.No hidden charges.
Anonymous (Sent Aug 7, 2007 9:30:58 AM)

The problem with prepay is that it is not as lucrative for the phone companies and they've begun really ripping off consumers. Prepay progressed and then regressed. Boost Mobile is in bankruptcy, Verizon is making prepay very difficult to use, and Virgin Mobile is falling off the face of the earth. Credit plans are more profitable for cell phone vendors, and since no one's had any reins on them and their crazy machinations, they run the consumer, instead of the consumer running them.
Jean, Westchester (Sent Aug 7, 2007 3:06:43 PM)

I had Verizon do this to me when I moved a few years ago. After several phone calls to them demanding they fix it I realized I was getting nowhere. I filed a fraud complaint on the FCC [probably meant FTC] website and could not believe how fast a Verizon executive called me to resolve the problem. From his response I wondered if my problem was caused by poorly trained call center personel or if it was intentional and they count on people not pursuing it.
Anonymous (Sent Aug 7, 2007 10:19:52 AM)

-Mobile DID release me from my 4 line contract when I moved out of their "good" coverage area. They posted and credited $200.00 per line on my final bill. They told me that not many people know that cell phone companies HAVE TO release you if you are no longer is their best or good coverage areas.
Lisa K. Tomic, Lakewood, CA (Sent Aug 7, 2007 3:43:38 PM)

this is why I use Alltel no contract extensions for rate plan changes or address changes no issue with what was said thats why I dont use sprint verizon att or any other carrier other than Alltel
John Doe, lansing, MI (Sent Aug 7, 2007 3:44:41 PM)

I would just like to note that US Cellular does not use these underhanded tactics. They allow you to make changes and purchase equipment whenever the customer wants, with NO CONTRACT EXTENSIONS... Furthermore, all extensions done with US Cellular require a signed contract AND a copy of the customers ID so there is no dispute as to what is being done to the account. I just didn't want US Cellular to be lumped together with these thieves that claim to provide "award winning customer service and networks" Thanks!
rudy, omaha, ne (Sent Aug 7, 2007 6:37:48 PM)

Talk to ATT and was told I extended my contract and when I stop the paying when the contract did expired and switch providers. They sent me a bill for 250 early termination fee. I called them and said I ask them when I extended contract they told me and I said I need the date I did this. They told me and said well I did talk to you on that date and I record every conversation would u like to hear it they said no AND SENT ME A BILL WITH NO FEES CASE CLOSED
ANAHEIM CA (Sent Aug 7, 2007 3:57:31 PM)

I had Sprint, I had Verizon, I had Cingular, all the same, hidden charges, extra charges, long contracts, solve yourself situations as a broken cell phone that took 3 weeks to fix because they couldn't replace, I got tired of being use and disappointed, I gladly paid the fee of $180 to get out of the contract.............Now I'm using MetroPCS, no contract no games, same number, for a fix $60 X month I got unlimited minutes day/night, text and all the other things I never use, yes is true, some times my call drops, but I just dial again, no big deal when You compare to the last charge I receive from Verizon: $320! the explanation; I was using roaming time!! How come? I never went out of Verizon coverage area!!
Carlos, Plantation, Florida (Sent Aug 7, 2007 5:41:51 PM)

Have any of you heard of the Sarbanes-Oxley Act?? You do realize that any cell phone company is required to advise you that your contract has been extended and provide the terms of agreement as well.
Cellular Employee (Sent Aug 7, 2007 5:36:10 PM)

Automatic cell phone contract extensions come under the heading of "Contracts of Adhesion". Re-read you Terms and Conditions VERY CAREFULLY.
For example, this is take directly from Verizon Wireless:
"YOUR CALLING PLANS BECOME PART OF THIS AGREEMENT. The prices you pay may depend in part on how long-the minimum term-you're agreeing in advance to do business with us. Calling Plans describe these prices and your minimum term. To the extent any condition in your Calling Plan expressly conflicts with this agreement, the condition in your Calling Plan will govern. If at any time you change your service (by accepting a promotion, for example), you'll be subject to any requirements, such as a new minimum term, we set for that change." Click
HERE for source.
Customer Service Man, Cleveland, OH (Sent Aug 7, 2007 10:52:28 AM)

Cell phone companies ask you for a commitment for their services. You come to them. I worked for a cellular carrier for about a year. And I can say first hand that I had many many people come in my store and complain due to the fact that their cellular contract had been extended. Most had bought a new phone recently or changed their minute increment. These customers would swear up and down that they never signed a new contract thinking that there was a slim chance that we kept such cumbersome paperwork at all let alone on site. We would go to the back, dig through the mountains of papers and present them with their signatures only to hear they didn’t realize what they were signing. To which I definitely had to bite my tongue and smile. These are contracts! I am sure that you pay more attention to any other contract that you may have signed. You don’t just sign them not knowing what they say! Now, the customers usually left more ticked off at themselves than they were at me. In the case that they renewed their contract over the phone I would just pull up our “notes” on the customer and read to them verbatim what they said when they agreed to another commitment. I would say that about 99% of such complaints that I handled were this situation.
I would really think ahead when you sign an agreement. These are contracts that bind you for 1-2 years. Read them.
Also, there were 3 common ways to get out of our agreement… 1. Buy your way out of it (which is what we are complaining about here) 2. Present your death certificate (which I am guessing you don’t have!) 3. If you happen to move to an area where there is no service and it can be proven (and I am not talking just at your house, bumpkins, I mean your area)
Summed up, read your contracts. Keep tabs on everything, there is occasionally a glitch and it can be fixed.
X-Cell Girl, PA (Sent Aug 7, 2007 5:04:14 PM)

From the complaints cited, there appears to be three problems. First, terms of engagement are murky. Second, many providers are simply not following U.S. Cellular's example of telling it all up front and getting the customer to acknowledge it. And finally, too many customers aren't reading their contracts carefully. You do NOT accept the service if you're not sure of your obligations. If the customer service wanker at the counter cannot answer all your questions, then get a supervisor.

Another piece of advice - stay away from Sprint! The comments on the July 17th story teem with complaints about Sprint!

If all providers followed the example of U.S. Cellular, this would wipe out much of the problem. I'm not sure more laws are needed yet.

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