Three of the nation's largest cellular phone companies yesterday announced a settlement with 32 states requiring the companies to give consumers better explanations of coverage and to disclose fees more clearly.
Verizon Wireless, Cingular Wireless and Sprint PCS, which have 84 million customers, agreed to provide coverage maps to customers and to give them at least two weeks to terminate new contracts without being charged a penalty.
State attorneys general first began investigating the companies three years ago after receiving complaints about misleading advertisements and service agreements, according to Maryland Assistant Attorney General William D. Gruhn. Maryland and Virginia are parties to the settlement.
Gruhn said the companies provided rate maps that were confusing to customers, who mistook them for coverage maps.
Rate maps show where customers can use their phones without additional charges, while coverage maps show where the phones work.
"Cingular was advertising being nationwide but didn't have service in a significant percentage of the country," Gruhn said, noting that there were similar problems with the other carriers.
Clay Owen, a spokesman for Cingular, said the company's advertising referred to the fact that it charged no roaming fees.
"For many years we have had nationwide plans where there was no roaming or long distance fees so, you could use the phone nationwide wherever there was service," Owen said.
Under the settlement, the companies must provide coverage maps and offer a 14-day trial period in which customers can terminate their contracts without paying an early termination fee, which can be as high as $175. Additionally, new customers can terminate a service contract within the first three days without being charged an activation fee. The companies also must make surcharges, fees and taxes clear.
All three of the companies said they already comply with the settlement terms and have made changes in their maps and advertisements since the inquiries began.
"Things have evolved over the last few years," said Verizon spokeswoman Nancy Stark. "So we are already meeting the requirements."
The Federal Communications Commission received 21,357 consumer complaints about wireless service in 2003, and 2,133 of those were related to the way companies market and advertise.
Janee Briesemeister, director of EscapeCellHell.org, a division of Consumers Union, said in a written statement that the settlement will be a significant improvement for customers who have "been stuck in a cell phone hell of misleading advertising and meaningless coverage maps."
"The fact that it took a massive investigation by states' attorneys to force these cell phone companies to do many of the things they promised they would do on their own shows the need for regulation," Briesemeister said. "Maybe consumers can't be heard on their cell phones, but their frustration with the market has come through loud and clear."
The companies will also pay $5 million to cover the cost of the inquiry and for "general consumer education," such as public service announcements.