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Consumer Tips From Attorney General

Consumer Tips From Attorney General

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Published by Fox Staff

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Published by: Fox Staff on Oct 05, 2011
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Attorneys at Law1700 U.S. Bank Plaza South220 South Sixth StreetMinneapolis, MN 55402Office: 612.339.4295 Fax: 612.339.3161www.mansfieldtanick.com
MEMORANDUMTO: Seth Kaplan, FOX 9 NewsFROM: Greg PerlebergDATE: October 5, 2011RE: Mobile Telephone ContractsGreg Perleberg
is a Partner at the Minneapolis law firm
Mansfield Tanick & Cohen, PA.
 Greg is a Business Law attorney, specializing in the areas of intellectual property, technology, e-commerce and entertainment law. He is also an Adjunct Professor at the McNally Smith Collegeof Music.
Be aware that some carriers may unfairly attempt to use even the smallest changes toyour wireless service plan
 — 
such as adding or decreasing minutes or text messages, amonthly discount applied to your bill, or upgrading your phone
 — 
to renew or create anew one to two year contract. Make sure you investigate before making any changes toyour wireless service plan.When you receive solicitations from your cell phone provider in the mail or via e-mail, besure to read the fine print. Acceptance of these offers may require an extension of yourexisting contract or creation of a new contract. Also, when solicited by telephone, verifywith the representative whether acceptance of the offer will renew or create a newcontract. Get written verification of the changes made to your plan and that there hasbeen no contract extension.Keep in mind that when you make changes to your wireless service plan, you may notactually sign a new contract. Rather, the company may try to consider your use of thephone as your binding agreement to the terms set forth in its contract.Check your bill every month to ensure that no unusual charges or discounts are beingapplied to your bill. Furthermore, if the bill shows the contract beginning and end dates,
 
check to make sure that your contract end date has not changed. If something is not righton your bill or if your contract has been extended without your consent, contact yourwireless service provider immediately.Any time you make changes to your service plan, you should ask your wireless providerfor a copy of your contract and any other documents that may govern your agreementwith your wireless provider. These documents will often set forth what changes thecompany believes may impact your contract duration.Be sure to investigate what steps you need to take to end or continue your service at theend of the contract. In some cases, the contract may be automatically renewed unless youcontact the company to terminate the service.
IF YOU BELIEVE YOUR CONTRACT HAS BEEN WRONGFULLY EXTENDED OR ANEW CONTRACT WRONGFULLY CREATED, CONTACT THE MINNESOTA
ATTORNEY GENERAL’S O
FFICE AT 651-296-3353 OR 1-800-657-3787 OR ATWWW.AG.STATE.MN.US FOR HELP.LEGISLATIVE HISTORY
The "
Cell Phone Consumer Empowerment Act of 2007
," sponsored by Senators AmyKlobuchar (D-MI) and Jay Rockefeller (D-WV), would have given customers 30-days to canceltheir cell phone contract; mandate that carriers pro-rate termination fees and require that carriersnotify customers if any service upgrades would trigger a contract renewal.
See
BECAUSE THIS BILL WAS INTRODUCED IN A PREVIOUS SESSION OFCONGRESS, NO MORE ACTION CAN OCCUR ON IT.
Senators Richard Blumenthal (D-Conn.) and
Al Franken
(D-Minn.) on Tuesday introduced abill that would ban wireless carriers from using contract clauses that strip users of rights to sue incourt. The S
enators’ proposed ―
Consumer Mobile Fairness Act
comes after the SupremeCourt decision last August to uphold the use of the mandatory arbitration clause.The
Federal Communications Commission (FCC)
has proposed
 — 
but not acted on
 — 
 
a ―billshock‖ rule that would require carriers to notify consumers once they get close to monthly data,
text and voice minutes. Last October, Verizon admitted to charging 15 million customers morethan $50 million for data services they did not intend to use.
 
KEY ISSUES
Many cell phone users do not know when their contracts end, and very few of them know thespecifics of their legal rights.END-USER AGREEMENTS: A contract of adhesion is when the agreement it is drafted by aparty that has superior bargaining powers, and uses that leverage to write the agreement to theiradvantage (a "take it or leave it" deal). Generally enforceable (similar to website agreements,software licenses, etc.
 – 
clickwrap, shrinkwrap, etc.)
 – 
unless unconscionable (e.g., severepenalty provisions, very small print, etc.).
Most businesses would never conclude theirvolume of transactions if it were necessary to negotiate all the terms of every consumercontract.
 LATE FEES: Currently limited relief for consumers; Waiting for either the Courts or the FCC todetermine who is going to regulate (the
FCC
is in favor of nationwide uniformity; The FCCChairman has said he favors a single national rule that would require early termination fees toshrink over the course of a contract). Most complaints are based on high rates that wirelesscompanies use to compute late fees. According to the
Better Business Bureau
, wirelesscompanies have received the most or second-most consumer complaints compared to otherindustries every year since 2003.
―CELL PHONE JAIL‖
& EARLY TERMINATION FEES (ETF
’S)
:Consumers are
―locked‖ into contracts (cannot switch
when a competitor offers a betterdeal).Most phones sold in the U.S. are also
―locked‖
into the carrier that sold them; certaincountries require mobile phones be sold in an unlocked state; Prices for an unlockediPhone can range from $400 to $700.A way for wireless companies to subsidize expensive mobile telephones (e.g., $50 for a$350 phone).
o
 
A reasonable fee to recover the cost of cell phones, which wireless companiessubsidize in exchange for customers signing up for long-term contracts.Form of 
―LIQUIDATED DAMAGES‖
 
o
 
Usually range between $175 to $200.
o
 
Wireless companies subsidize the telephone in exchange for revenues fromcontract for years to come.
o
 
However, EFT
’s often much
higher that the actual lost profit the wirelesscompany suffers.Right to opt-out of mandatory arbitration.

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