Plan to trim cell phone cancellation fees draws criticism

WASHINGTON – A proposal for the government to help cell phone customers avoid expensive fees when they cancel contracts with wireless companies may go down in flames after consumer advocates protested today that it isn’t generous enough.

Cell phone companies routinely charge customers $175 or more for quitting their service early. Under a proposal to the Federal Communications Commission, the wireless industry would give consumers the opportunity to cancel service without any penalty for up to 30 days after they sign a cell phone contract or until 10 days after they receive their first bill, among other provisions.

In exchange for the government’s approval, the agreement would let cell phone companies off the hook in state courts where they are being sued for billions of dollars by angry customers. If approved by the FCC, the proposal also would take away the authority of states to regulate the charges, known as early termination fees.

The proposal would require companies to reduce fees month by month over the course of a contract based on how long customers have left, according to people familiar with the offer who spoke on condition of anonymity because the FCC has not accepted it. It would not abolish cancellation fees entirely and would not refund such fees to anyone who already paid them.

Consumer advocates warned Wednesday that the industry’s offer wasn’t good enough.

“If this plan goes through, the nation’s largest cell phone carriers get a get-out-of-court-free card,” said Chris Murray, senior counsel for Consumers Union, the nonprofit publisher of Consumer Reports magazine. “We have long opposed limiting consumers’ rights to sue, and that seems to be what we’re doing here.”

Another expert agreed.

“The consumer protections are an inadequate fig leaf to justify federal pre-emption,” said Patrick Pearlman, a lawyer with the consumer advocate division of West Virginia’s Public Service Commission. “The FCC is not an adequate policeman.”

The nation’s No. 2 wireless company, Verizon Wireless, offered the proposal to the FCC for its review after high-level meetings with senior FCC officials. It did so in consultation with other leading wireless companies, whose executives indicated they would not oppose its provisions, people familiar with the offer said.

The FCC has declined to comment on the proposal.