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Everyone reads their cell phone service contract very carefully, combing through it for unreasonable terms, right? We’ve all seen the seemingly unreasonable early termination fee, thought to ourselves that it was far too high, and then signed on the dotted line anyway. Cell phone companies claim that the fees are necessary to recover the cost of cell phones, but it certainly seems the goal is to make it harder to switch providers. In an attempt to address this problem, the Federal Communications Commission (FCC) is considering taking some action to make it less painful to switch service providers and avoid early termination fees. Sounds nice, doesn’t it?
Cell phone companies recently submitted a proposal to the FCC that would allow consumers to cancel service for up to thirty days without any penalty. It would also cap the fees at a more reasonable level and force providers to reduce the fees on a monthly basis as a customer’s time remaining on the contract decreases; however, it looks like the FCC plans to get rid of early termination fees altogether.
There are several lawsuits underway in the courts and a number of groups think that the states should be regulating these contractual provisions instead of a federal agency. Is this an appropriate area for a federal agency to regulate? Federal law prohibits states from regulating wireless rates, but they do have some authority over certain contractual provisions. Maybe the better question is, “Does it really matter?” The cell phone companies are actively trying to get the FCC to take this question away from the state courts to avoid several lawsuits that have been filed. Their fear seems to suggest the possibility that the court system is already on the verge of settling this dispute in the consumer’s favor.
- Joshua Bohannon
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