Can you imagine relinquishing your cell phone forever? Or even for just a week? Forget talking and texting. We use our wireless devices to manage our money, our schedules, and our lives. Some of us are even interested in using the devices to handle our health care. In other words, Whatever we need, there’s an “app for that” on our wireless devices.
With the industry now boasting that there are more wireless connections in the U.S. than there are people – our devices are as indispensable as landlines once were, if not more so.
So it was surprising to hear a witness at a recent congressional hearing imply that ditching our cell phones should be an easy choice.
‘I lived in a world where there were no cellphones,’ said the witness Victor Schwartz, a law firm partner testifying on behalf of the U.S. Chamber of Commerce, ‘I kind of made it. I was all right.’ His comment was obviously puzzling in a modern context, and distracted from the real issue at hand, consumer rip-offs perpetuated by wireless companies, particularly in the fine print of cell phone contracts. Schwartz’s answer to the problems: Give up your mobile device.
The hearing focused on contract provisions that eliminate consumers’ legal rights to file claims against companies in court for wrongful conduct, instead forcing them into private, corporate-run proceedings to settle disputes. The process is called “forced arbitration.”
These one-sided clauses are so widespread that all four nationwide wireless carriers (AT&T, Verizon Wireless, T-Mobile and Sprint-Nextel), and the overwhelming majority of regional providers use them. The contracts also forbid consumers from participating in joint legal actions, or “class actions” against their cell phone providers.
Schwartz’s “solution” – abandon wireless devices – could not be serious. Mobile devices are an integral part of millions of people’s lives, not to mention an important part of the U.S. economy. That means wireless abuses need to be fixed, not shrugged off.
Wireless providers recently have come under fire for numerous bad practices. For example, according to a 2010 government survey, about 30 million Americans said that their cell phone bills soared suddenly even though they had not changed their wireless plans. The vast majority of those that experienced this “bill shock,” said that their carriers failed to notify them of the impending increase.
A major sour point for users, and a cause of bill shock, is data usage. Providers have been accused of using false measurements for data usage, providing misleading information on data plans, and using deceptive triggers on phone keypads which turned out to be a surefire way for consumers to inadvertently initiate data charges. Last year Verizon Wireless agreed to pay a $25 million penalty and to refund $52.8 million for incorrectly billing 15 million subscribers $1.99 each when they initiated data sessions on their phones.
Then there are the exorbitant penalties for consumers seeking to end their contracts, and the unauthorized charges on monthly phone bills for third-party services that subscribers did not choose or want, a multimillion dollar illegal practice known as cramming. All of this and more explain why the telecom industry is at or near the top of some states’ annual consumer complaint lists.
There is little option for reining in these abuses. The authority of state governments is limited, and the federal oversight agency, the Federal Communications Commission, has been unwilling to use its powers to full capacity, instead opting to give the industry room to “self-regulate.”
Meanwhile, many Congressional bills introduced in recent years to curb certain telecom practices have not become law. In fact, recently introduced bills have proposed to weaken FCC authority to regulate the industry. All of these actions are going in the wrong direction for 300 million consumers as they face a powerful industry whose products they want and need, but whose practices unnecessarily deprive them of their rights.
The raft of wireless rip-offs and lack of government oversight options mean that the best solution is to stop the wireless providers’ fine-print theft of consumer legal rights. Consumers need the ability to defend themselves and hold bad actors accountable. Right now, the wireless companies are unilaterally blocking the courthouse doors.
Solution: We must urge Congress to pass two bills, the Arbitration Fairness Act (“AFA,” S. 987 and H.R. 1873) and the Consumer Mobile Fairness Act (“CMFA,” S. 1652) which would restore consumer’s rights. The AFA would eliminate forced arbitration clauses in consumer and employment contracts, and the CMFA would remove forced arbitration specifically from consumer wireless contracts. The legislation would empower consumers and deter industry abuses.
Christine Hines is Consumer and Civil Justice Counsel at Public Citizen’s Congress Watch division