When cell contracts are ruled illegal…
If you have a cell phone, you’re probably under a contract. The contracts are usually long with loads of fine print, but they all boils down to a simple deal: The cell phone provider will provide cell phone service for you, so long as you pay them for it. There are many different types of cell phone contracts, but the most popular one these days is one where the customer signs an agreement to stay with a cell phone provider for the 2-3 years in exchange for a heavily-discounted phone. And if you choose to break that contract, you agree to pay a penalty (usually $200-$300). This type of contract really isn’t that special, for I’m sure you can find similar arrangements over all types of businesses.
But not for long. Yesterday, news broke about a ruling out of California that stated that the early-termination fees are “illegal.” Sprint must pay back about $18 million in early-termination fees to its California customers and stop trying to collect on $54 million in fees not paid. I haven’t been able to find a court document or news story that explains the judge’s reasons for the ruling, but I bet it can’t be good. I don’t know if I even want to know how a judge can rationalize why the government must step in and nullify this one section of an explicit, voluntary contract. I’ve read a lot of commentary about this ruling, though, and I think the following statement is a good example of the general opinion that many have about this.
From Mark Selfe at the Red Herring blog:
I’m all for the idea of setting up purchase plans directly with the manufacturers and not the subsidized carriers. This gives the consumer more control. When I buy a car I’m not forced to sign up with a gas company to exclusively buy their gas for the next two years. It just doesn’t make any sense.
What’s missing in this argument (and in most people’s arguments on this) is the fact that a customer made a commitment to pay that fee for leaving early. In exchange for that commitment, the customer received something from the cell phone provider. It might have been a new, fancy phone, or a cheaper monthly rate than someone who won’t make a long commitment. By what right could a customer feel entitled to break that agreement, especially when he or she has already received something in advance (like a fancy cell phone)? There’s another word for that: Theft. It’s like buying something with a bad check. You can walk out of the store with the item, but it’s not yours. And at that point it’s not just a matter of returning the goods, it’s also a matter of dealing with the fact that you knowingly stole something from another individual.
The government’s proper role in situations like these are to enforce the contracts. I know there are problems with our legal system, but it boggles my mind that it can really be so bad that the government would actively take a role in making sure that customers were let out of the contracts they signed. Selfe says that it gives consumers “more control,” but he has it backwards. Without a government that will enforce contracts, our word means nothing. Nobody would enter a long-term agreement with another individual if they knew that nothing would happen if the agreement were broken.
I think the government’s role in enforcing contracts is just one side of this situation, though. Another side is the value of one’s word. Should you do what you say you are going to do? Should you fulfill your commitments? Sadly, I don’t think most people think about this. Or worse, they don’t even care. Some are hopeful this could help them out of their own contract, some have grand ideas about how the cell phone industry “should work,” but hardly anybody will say, “I will honor my agreement because I said I would.”
For anybody who is happy about this ruling, I have one simple question: How much is your word worth?
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2 Responses to “When cell contracts are ruled illegal…”
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What about the other side of the coin. I have had Sprint for some time now and receive only one bar on the signal meter in my own home. Even with this legitimate complaint they still will not let customers out of the contract. Referring to your segment about upholding your commitment I believe they need to be held to a similar standard.
Your situation is not the “other side of the coin.” Your situation is one in which there’s a dispute whether one side is fulfilling its side of the agreement, which happens all the time. The story I commented on was about a court who said that making those types of contracts are illegal, which is an entirely different matter. According to this judge, it doesn’t matter if Sprint gives you lousy service or great service — you get out of the contract.
But I agree with you, your phone provider should be held to the same standard. If you make a long-term commitment with a phone provider, they’re also making a commitment to you. If they break that commitment, take them to court.