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Cellphone Contracts: Hard to Get off the Hook
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AT&T will take extenuating circumstances, such as losing a job, into account when dealing with customers, said spokeswoman Alexa Kaufman.
"We try to figure out what it is they're not happy with," she said. "Maybe the bill's too high and we can offer options to lower it."
Such efforts have not done much to boost customer satisfaction, however. A recent report by the American Consumer Satisfaction Index showed that, despite modest improvements, the wireless industry still ranks far below fast-food restaurants and airlines. Poor customer service is the No. 1 reason customers switch to another carrier, according to a CFI Group report released this month. Doriot, an author of the CFI report, said frustration over contract terms is especially harmful for carriers now that competition for new customers is so fierce.
"When cellphone companies charge consumers fat penalties to leave, they're throwing sand in the gears of competition, which means consumers pay higher prices for shoddy service," said Chris Murray of Consumers Union, which has been lobbying against cancellation fees.
Consumer lawsuits in several states, including California and Florida, have challenged the fees as unfair and illegal because they punish customers for moving to another service provider. Wireless carriers have asked the FCC to treat the fees not as penalties but as rates companies can charge for service. Several members of Congress have expressed concern over the fees, and some have said they plan to introduce legislation this fall that would give states more authority to regulate the fees.
"It's amazing how many people really resent being locked into a contract," said Craig Wurtenberg, co-founder of CellTradeUSA.com, a Web site that matches people wanting to get rid of the remaining time on their contract with people looking for shorter cellphone commitments. Wireless companies release customers from their contracts if they transfer the remaining time to someone else.
Traffic on the site, which typically lists requests from about 2,000 people wanting to unload their contracts, increased more than 30 percent when the iPhone hit store shelves in June.
Another site, CellSwapper.com, often sees a surge of people trying to escape contracts when a cool new phone comes out, said chief executive Adam Korbl.
The iPhone requires a two-year contract with AT&T, although the $500 phone does not come with a discount. But Al Chang, a consultant from Berkeley, Calif., found a way to reduce the pain of a cancellation fee.
Before the iPhone was released, Chang, 37, signed up for a two-year contract with AT&T with the purchase of a Blackberry for a discounted price of $150. He turned around and sold the device online for $350, and then bought an iPhone.
"That way, I have $200 in my pocket -- so if I ever do want to cancel, I haven't lost any money on the deal," he said. "I think I actually made a profit."
