CFC Applauds Senate Committee Vote
allow consumers with defective handsets to break wireless service
contracts without penalty.
The House bill, approved by a 72-to-43 margin Thursday, now heads to the Senate for consideration.
‘When someone buys a cellphone that turns out to be defective, they
have to go back to the provider for a repair or replacement,’ said Rep.
Susana Mendoza, a Democrat who represents Chicago. ‘When this happens
repeatedly, it burdens customers both in terms of time and money lost,
but also with increased frustration. Cellular providers have an
insufficient incentive to be responsive because the consumer is usually
locked into a long-term contract.’
Under the bill, subscribers whose cellphones must be repaired or
replaced as a result of mechanical or manufacturing defects three times
or more can cancel their service contracts without having to pay an
early termination fees. Such charges range between $150 and $200 per
‘For many people, a cellphone is their only means of
communication,’ Mendoza said. ‘Keeping consumers with faulty equipment
locked into a long-term contract is just another example of big
businesses trying to take advantage of the little guy.’
The lawmaker’s bill also offers consumers the option of upgrading or
downgrading their phone model by paying or being refunded only the
difference in cost based on promotional prices’also without incurring
penalty charges. An amendment to the bill was approved to strike
language that would have required a mobile phone operator to pay a
consumer $25 for each day the handset is unavailable to the consumer or
each day the consumer does not have full access to all of the
The mobile phone industry said the Mendoza legislation is unnecessary.
‘Wireless consumers have an abundance of choice when it comes to
hand-held devices and surveys consistently show they are satisfied with
both the operation and functionality of their handsets. It is the rare
exception and certainly not the rule for a device to malfunction,’ said
Joe Farren, a spokesman for national cellphone association CTIA.
‘Because the market for wireless handsets is so competitive, every
manufacturer has a huge incentive to produce an exceptional device. If
they don’t, they won’t be in business for very long. I can’t imagine a
greater ‘regulator’ than that.’
On a related front, the California Consumer Federation applauded a state Senate committee’s passage of a cellphone consumer protection bill.
‘The cellphone industry ranks No. 1 among all industries in consumer complaints filed with the Better Business Bureau,’ said Richard Holober, executive director of the Consumer Federation of California.
‘Consumers have put up with deceptive contract terms, poor phone
reception, excessive early termination fees and inadequate customer
service for long enough.’
The bill’s author claims industry consolidation is hurting consumers.
‘Cellphone companies are merging, competition is decreasing,
customer service is deteriorating, and yet California cellphone
subscribers have little or no protection against industry abuses,’ said
Sen. Alan Lowenthal (D).
Some cellular carriers have voluntarily moved to enact to varying degrees some requirements in the Lowenthal bill.
The bill moves next to the Senate Appropriations Committee. The
legislation comes in response to the California Public Utilities
Commission’s decision in 2005 to replace the year-old telecom consumer
bill of rights with a rule based on education and enforcement.