Cell-phone gripes heading for class action

Complaints increasing along with popularity of wireless communication

May 18, 2004|By Jim Finkle | Jim Finkle,THE ORANGE COUNTY REGISTER

SANTA ANA, Calif. - Consumer advocates are looking to the courts to deal with what they say is an increase in the number of complaints about cell-phone carriers.

The Foundation for Taxpayer and Consumer Rights said it's collecting the stories of upset wireless customers and organizing them in preparation for filing a new round of class action lawsuits focused on alleged overcharges and poor service.

Complaints about wireless carriers have risen even though cell phones are increasingly popular.

As cell phones have become nearly ubiquitous, the industry's total revenue has more than doubled, from $40 billion in 1999 to $88 billion last year.

Few regulations

Meanwhile, the government has imposed few regulations on wireless providers. Consumer groups such as the Foundation for Taxpayer and Consumer Rights say that leaves them no recourse except the courts, because companies aren't responding to their concerns.

The Cellular Telecommunications & Internet Association, which represents most wireless carriers, says the industry works hard to address complaints, and that its overall track record isn't bad considering more than half of all Americans use cell phones.

Harvey Rosenfield, founder of the Foundation for Consumer and Taxpayer Rights, disagrees.

"People are just outraged," he said. "There's not another issue that's got people so angry." In October, his group filed lawsuits in Los Angeles against two carriers.

Specific complaints

One claims that Cingular Wireless misled customers about the quality of its coverage, while imposing heavy termination fees.

A suit against Nextel Communications complains that a new policy of charging for itemized phone bills makes it difficult for customers to identify billing errors. Each company says the lawsuit is without merit.

In September, California Public Utilities Commissioner Carl Wood recommended that Cingular be fined more than $12 million for failing to let customers try out new phones before incurring those termination fees. The commission has not acted on the proposed fine.

It makes sense that complaints would be on the rise. The number of U.S. cell-phone users has more than doubled over the past five years, increasing opportunities for mistakes to be made. Typical consumer beefs about cell-phone companies involve:

Termination fees: These charges are incurred when a customer cancels service before the end of a contract, often because the customer isn't satisfied with reception or is moving out of a company's coverage area. Termination fees generally run from about $150 to $300 per phone.

Extras: Providers have started charging fees above monthly calling-plan costs. For example, carriers now tack on charges to cover what they say are costs of complying with government regulations. Nextel charges customers to receive a paper bill with call details.

Billing: A recent Consumer Reports poll found that one out of four people had been overcharged by at least $10 on their most recent bill.

In response to such complaints, cell-phone carriers said they'd voluntarily start following procedures to make themselves more consumer friendly. They include giving all customers two weeks to return new equipment before being locked into a contract.

Broad powers sought

Carriers unveiled the plan as an alternative to more stringent rules proposed by PUC Commissioner Wood. Citing concerns about what he says are unreasonable cell-phone termination fees, binding contracts that customers don't understand, and inadequate company response to consumers' complaints, Wood is trying to persuade the full commission to assume broad regulatory powers over cell-phone service.

In contrast, local phone companies have long had to comply with regulations covering everything from rates and billing to discounts for low-income customers.

Wireless companies are working hard to block passage of Wood's proposal, partly because California is the biggest cell-phone market in the United States. It's also influential in policy-making circles. Other states often look to California laws and regulations as a model, whether it be in telecommunications, health care or other areas.

Bait and switch

Rosenfield's foundation isn't the only entity filing lawsuits against cell-phone companies.

A lawsuit filed in February in Los Angeles claims that AT&T Wireless used "false and deceptive advertising" to bait customers with one plan, then persuade them to buy more expensive ones.

A suit filed last month charges the company has broken the law by refusing to prorate bills on accounts canceled in the middle of a billing cycle.

AT&T Wireless spokesman Art Navarro declined to comment on the lawsuits, which are making their way through the system.

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