Why We Love to Hate Our Cell Phone Company
Cell phone customers are unhappy with unexpected charges for
everything from roadside assistance to new handsets--and they're
calling their lawyers to complain.
Tom Spring, PC World
Tuesday, September 12, 2006 1:00 AM PDT
http://www.pcworld.com/article/12693...l?tk=nl_dnxnws
Maybe it's a $3-a-month charge from Verizon Wireless for Roadside
Assistance that you don't remember requesting. Maybe it's an $18
"upgrade fee" that Cingular Wireless neglected to mention when you
bought that snazzy new Motorola Razr phone. Or maybe you're just
peeved about dropped calls.
Whatever the cause, if you've had it with your cell phone company,
you're not alone. Consumers are mad, and the lawsuits are flying.
Driving Discontent
According to the Better Business Bureau, cell phone companies drew
30,483 consumer complaints last year to become the top-ranked industry
for grievances. The most common complaints: inaccurate bills,
inadequate customer service, and deceptive contract terms. Cell phone
companies were the subject of more complaints than such perennially
unpopular businesses as car dealerships, hotels, retail outlets, and
insurance companies, BBB statistics show.
Experts attribute the rise in customer dissatisfaction to fallout from
mergers and acquisitions in the wireless industry, including the
Cingular-AT&T Wireless and Sprint-Nextel mergers.
Kirk Parsons, senior director of wireless services for J.D. Power and
Associates, says a study by the famed market research firm found that
consumer satisfaction with wireless phone service providers in 2005
was down 10 percent from 2004 levels.
Below are details about some of the most common cell phone complaints,
as lodged in recent lawsuits and filings to the Federal Communications
Commission and the Better Business Bureau.
Roadside Assistance Rage
At least two federal class-action lawsuits have been filed over
Roadside Assistance charges of $2 or $3 a month on Cingular and
Verizon Wireless bills. In separate lawsuits, customers of both
carriers say they never ordered the optional service, which Cingular
and Verizon say will provide emergency service to auto drivers who get
stranded on the side of the road.
Cingular's Roadside Assistance is an emergency insurance program for
motorists that Cingular markets on behalf of Asurion Insurance
Services. Should a subscriber have a flat, get locked out of their
car, or run out of gas, they can call a special number on their
Cingular handset and someone will come to their assistance, free of
charge.
Michael Gellis sued Verizon in Oakland, California, Circuit Court,
while Cingular Wireless customer Margaret Moffatt filed suit against
the firm in Wayne County, Michigan, Circuit Court. Both customers say
that for more than two years, without their consent, the carriers had
added charges for Roadside Assistance to their monthly bills.
Both suits allege violation of state consumer protection laws, breach
of contract, and "unjust enrichment." Both suits were eventually
transferred to U.S. District Court in Detroit, where attorney Peter
Macuga of Macuga and Liddle is representing both plaintiffs.
Cingular declined to comment on the two pending cases. However, its
representatives said Cingular typically offers a free 60-day trial of
the Roadside Assistance program to customers when they upgrade or
change their plan. If the customer doesn't cancel the service after
the trial period ends, Cingular begins adding the charges to their
monthly bill.
Cingular says it never initiates the free Roadside Assistance trial
without the customer's consent, whether in writing at one of the
carrier's stores, verbally over the phone, or by clicking to accept a
terms-of-service agreement online. "If folks have had that on their
bill, and they didn't order it, obviously there is a mistake somewhere
and we can correct it," says Cingular spokesperson Mark Siegel.
A Verizon Wireless press contact also said that the company doesn't
add services to a customer's calling plan without consent, adding that
Verizon would work to resolve disputes related to any charges. Verizon
also declined to comment on the lawsuits.
Singularly Aggravating
Cingular is facing additional complaints stemming from its merger with
AT&T Wireless in October 2004.
One group of customers--people with older phones that use AT&T or
Cingular analog or TDMA networks--is complaining about Cingular's
announced intention to charge them $5 per month for continued service.
Another group--former AT&T Wireless customers who still use that
company's TDMA network--is angry about what they describe as
deteriorating network quality in the wake of the merger.
Both groups say Cingular is trying to force them to upgrade to more
expensive phones and rate plans on the company's newer
GSM/
GPRS
network.
Cingular says the $5 monthly fee is needed to recoup costs associated
with maintaining the older networks. Currently, 4.7 million
subscribers, about 8 percent of Cingular's total, use Cingular's TDMA
or analog networks, Siegel says. Cingular had no comment about the
alleged deterioration of service on the old AT&T TDMA network.
Forced to Switch
Yet another group of angry Cingular customers are former AT&T Wireless
customers who did switch to Cingular's
GSM service following the
merger--and found that they not only had to buy a new phone, but had
to pay an $18 transfer fee that Cingular charged them simply for
switching to Cingular's
GSM network. Those customers also had to pay
$18 for the
SIM chip that contains the phone number and other user
information that is required by
GSM handsets.
And switching wireless carriers to protest against Cingular was not an
attractive option: People who tried to leave Cingular with time
remaining on their AT&T contract were subject to an early-termination
fee of $175.
In response to these complaints, Cingular in July 2005 began waiving
the transfer fee for former AT&T Wireless customers who migrate to a
Cingular plan. Cingular subsequently also waived the charge for its
own customers who buy new phones to switch from older networks to
GSM
service. However, these concessions came too late to pacify some
customers.
Several consumer advocacy groups headed by the Santa Monica,
California-based Foundation for Taxpayer and Consumer Rights filed a
federal suit in Seattle, alleging that following its acquisition of
AT&T Wireless, Cingular intentionally degraded service on legacy AT&T
networks in hopes of driving AT&T's customers to Cingular's
GSM
network. The suit also accuses Cingular of charging AT&T customers
unfair fees to make the switch.
One State's Fee Fine
Meanwhile, Cingular's business practices in California have drawn the
ire of state authorities. In July, a state appeals court upheld a
$12.1 million fine imposed on the carrier in 2004 by the California
Public Utilities Commission. The judges agreed with CPUC regulators
who said Cingular knowingly signed up more customers than its network
could handle, while at the same time charging early-termination fees--
sometimes amounting to hundreds of dollars--to customers who cancelled
their service.
The CPUC also said Cingular failed to provide customers with an
adequate trial period and ordered Cingular to refund early termination
fees charged to customers who cancelled their contracts between
January 2000 and May 2002, refunds that could cost the company
millions of dollars.
Cingular has since extended its trial period from 15 days to 30 days.
Consumer organizations such as the U.S. Public Interest Research Group
have applauded California's efforts to combat unreasonable early
termination fees. "Early termination fees make it easy for companies
to deliver bad service," says Ed Mierzwinski, USPIRG's consumer
program director. Such fees give customers little recourse if service
deteriorates midway through a contract, he explains.
Fees for Phone Upgrades
Cingular's transfer fees aren't the only ancillary charges frustrating
wireless customers. Leading carriers routinely charge an upgrade fee
simply for switching to a new phone. Sprint Nextel charges customers
$18 when they upgrade to a different handset. Cingular charges a
similar upgrade fee of $18. Verizon Wireless customers who buy new
handsets within 22 months of signing up for service (or of a previous
handset upgrade) are subject to an upgrade fee of $20.
In posts on gripe sites such as My3Cents.com and Planet Feedback, some
customers say they were never told about these fees at the time of
purchase and were surprised to see them on their phone bill, typically
two months after purchase. By then, the window for cancellation of the
purchase without termination fees had expired.
People are particularly aggravated to see the fee after purchasing a
phone that the carrier had marketed as being "free" after rebate, or
during an "instant savings" promotion that's supposed to refund the
cost of the phone. These promotions are common with all the major
carriers.
Sprint and Cingular officials say these fees cover service and
administrative costs associated with upgrading customers to a new
handset. The officials also say their sales representatives and Web
sites make all fees clear to customers when they purchase a new phone.
The Biggest Gripe
Wireless industry experts including J.D. Power and Associates' Parsons
say that much of the frustration experienced by Cingular, AT&T
Wireless, Sprint, and Nextel customers stems from the complexities
involved in merging the technologies and billing processes of huge
networks.
Parsons adds that consumer expectations have risen as the cell phone
industry has matured. "Today's cell phone users have zero tolerance
for dropped calls," Parsons says.
However, dropped calls don't top the list of cell phone gripes.
Instead, billing issues account for three times as many complaints as
service quality, according to the
FCC's May 2006 Quarterly Report on
Informal Consumer Inquiries and Complaints.
Billing issues have prompted several state-level initiatives by
consumer groups attempting to change the way wireless carriers do
business.
In New York state, the AARP and other consumer groups are backing
legislation that would force cell phone companies to make their bills
easier to understand and allow customers to cancel service contracts
without penalties. Similar initiatives are in the works in California
and Minnesota.
Who Should Regulate?
These state-level campaigns underscore a larger battle over whether
the federal government or the states should have the authority to
regulate the cell phone industry. Wireless carriers would rather be
regulated by a single federal agency (the
FCC) than by the states,
which are trying to gain more control over cell phone services to
their residents.
In August, the cell phone industry suffered a setback when a federal
court of appeals in Atlanta ruled that the
FCC overstepped its
authority by telling state regulators they couldn't require or
prohibit line items on bills for wireless services.
The ruling means that states will be able to dictate how cell phone
bills are presented to customers. The CTIA, a wireless
telecommunications industry trade association, has complained that the
ruling will force wireless providers to establish a different process
for each state. "Complying with disparate regulatory regimes will only
increase consumer costs and slow innovation," CTIA president and chief
executive Steve Largent said in a statement.
But the U.S. Public Interest Group's Mierzwinski says the ruling is
good news for consumers because it will give state regulators the
muscle to ban deceptive cell phone billing practices.
"The states are doing a much better job these days to protect
consumers than the
FCC [is]," Mierzwinski says.
Nevertheless, for any cell phone customer, it pays to remember that
your best strategy is not to depend on government agencies, but to
police your own bill. Watch it like a hawk, read the fine print, and
ask lots of questions.
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