Consumer Federation of California

NEWS RELEASE

Immediate Release: Contact: Richard Holober (650) 307-7033 cell

AB 1010 (Ruskin) would give cell phone customers 30
days to cancel contracts without being subjected to exorbitant
termination fees

(Sacramento, CA) The Senate voted to approve Assembly Bill 1010
(AB 1010) by Ira Ruskin (D ‘Redwood City) today, after easily passing a
critical Committee vote on Tuesday. Cell phone users are now another
step closer to winning back critical protections against deceptive cell
phone industry practices. AB 1010 would restore the right to a 30 day
grace period to cancel cell phone contracts without having to pay
outrageous early termination fees. The vote in the Senate was 22 to 12.

Richard Holober, Executive Director of the Consumer Federation of California said,
"Californians are fed up with deceptive cell phone marketing and lousy
phone reception. AB 1010 simply gives consumers 30 days to make sure
their new phone works properly and their bill isn’t loaded with hidden
charges."

"I am very pleased the State Senate recognized the importance
of providing Californians with this essential consumer right. When we
buy a cell phone, we should have a reasonable time to return it if it
does not provide the service we expect," Ruskin said.

A recent poll conducted by the Consumer Federation of
California, the legislation’s sponsor, found that 87% of California
voters want 30 days to cancel a new cell phone contract without penalty
or early termination fees. Californians enjoyed this right under
regulations adopted by the Public Utilities Commission in 2004.
Yielding to pressure from giant cell phone companies, the governor
appointed new anti-consumer commissioners to the PUC. With a new
industry-friendly majority in place, the PUC suspended this regulation
in 2005, and repealed it in March 2006.

Most cell phone companies require a minimum one or two year
contract, and charge customers early termination fees as high as $200
or more, even if service is cancelled in the 23rd month of a two year
contract. A 30 day cancellation right gives customers a chance to find
out if reception is good where they use their phone and to look at
their bill and see if it is loaded with fees that were not clearly
identified in the phone ads.

Supporters of the legislation point to the fact that in 2004 and 2005,
when California consumers had the 30 day grace period, cell phone
companies grew and prospered in California. Mergers have since reduced
competition in the cell phone industry, leaving only four companies ‘
Verizon, Cingular, Sprint-Nextel and T-Mobile ‘ in control of 80% of
the US cell phone market. The cell phone industry ranks near the top of
all industries in consumer complaints filed each year. A study by the
US Public Interest Research Group found that early cancellation fees
cost consumers one billion dollars every year. In fact, early
termination fees are an obstacle to competition, as the cost of getting
out of a bad contract is punitively high.

The next stop for AB 1010 is the Assembly. Supporters of the
bill include: Consumer Federation of California (Sponsor), AARP,
Consumers Union, TURN (The Utility Reform Network), California Labor
Federation, AFL-CIO, Communications Workers of America District 9,
Latino Issues Forum, CALPIRG, and the California Alliance for Retired
Americans. (Partial list)

The Consumer Federation of California is a non-profit organization, established in 1960, that advocates for consumer protection laws and regulations.