Bill Targets Cell Phone Termination Fees
Sen. Amy Klobuchar, D-Minn., introduced legislation Thursday that would set limits on the termination fees that wireless providers can charge their customers for cancelling their wireless contracts early. "Forcing consumers to pay outrageous fees bearing little to no relation to the cost of their handset devices is anti-consumer and anti-competitive," Klobuchar, a Senate Commerce Committee member, said in a statement. She introduced the bill with Sens. Russ Feingold, D-Wis., Jim Webb, D-Va., and Mark Begich, D-Alaska.
Under the bill, providers would be barred from charging an early termination fee that is higher than the cell phone discount the wireless company offered a customer to enter into a multiyear contract, required to pro-rate the early termination fees for consumers when they opt out of their contracts early, and required to provide "clear and conspicuous disclosure" of the early termination fee rates. Klobuchar said the legislation was offered two weeks after Verizon Wireless doubled its early termination fee from $175 to $350 for some subscribers. Klobuchar has urged the FCC to examine Verizon's decision.
Steve Largent, president of the wireless industry group CTIA, said in a news release that the bill is "unnecessary" because wireless carriers already pro-rate early termination fees. "That was the response of a highly competitive industry to consumer demand, and this type of prescriptive mandate runs the very real risk of limiting consumer options in the future," he said.
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