Klobuchar bill would limit cellphone cancellation fees

Sen. Amy Klobuchar (D-Minn.) today introduced a bill to set limits on the early termination fees cellphone carriers charge consumers who want to get out of their cellphone contracts early.

Last week, Hillicon Valley reported that she was working on the bill. The bill also requires wireless providers to pro-rate the fees and clearly notify customers about the fees, not only at the time of purchase but for the duration of the contract.

Klobuchar, along with Sens. Russ Feingold (D-Wis.), Jim Webb (D-Va.) and Mark Begich (D-Alaska.), say the fees are "budget-busters" and that long-term contracts and the fees required to get out of them, which are typically $150-$350, are not fair to consumers.

"Changing your wireless provider shouldn't break the bank," Klobuchar said. "Forcing consumers to pay outrageous fees bearing little to no relation to the cost of their handset devices is anti-consumer and anti-competitive."

Begich said: "In these tough economic times, the last thing consumers need is to see rates doubled for no apparent reason. We need to do what we can to ensure Alaskans and wireless users across the country get a fair deal at every turn."

While Klobuchar has previously introduced legislation to curb the cancellation fees, this move was spurred by Verizon Wireless' recent announcement that it would start doubling its fee for smartphone users.

Verizon Wireless spokesman Jeffrey Nelson said consumers always have the choice of buying a cellphone at full price without a 1- or 2-year contract.

"A broad array of Americans who might not otherwise be able to afford broadband connections to the Internet with a home PC, or by paying full price for a smartphone, have an affordable way of participating in the online world when they choose a subsidized option," he said.
 
"This is not about collecting fees, it's about putting state-of-the-art devices into the hands of the most people possible, at affordable prices."

Last month, Klobuchar rebuked Verizon Wireless for the fee increase and demanded that the FCC address it.