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Escape from Cell Phone Purgatory

How to get out of your cell phone contract without paying a termination fee

David Wood
ConsumerAffairs.com

August 30, 2007 

That’s what I thought. Open wide!

A typical cell phone early termination fee (ETF) can cost $175.00 to $250.00 per line, and that's just from the carrier only. If you signed up through certain dealers -- such as a kiosk in a mall -- it’s possible they have an additional ETF, as high as $400.00 per line.

Bailing out of your contract early is easy, if you want to fork over the cash. However, try to leave without losing your wallet and it's another story.

ConsumerAffairs.com receives many complaints from people like Gary and Christina.

“I have requested that they [Sprint] terminate my cell phone contract early without charging me the $400.00 in penalties because they [are] providing very poor service…,” wrote Gary, of Daniels, West Virginia. “They tell me that I can either put up with their poor service until my contract expires, or ... pay a termination fee of $400.00.”

In addition, Christina, of Baltimore, wrote, “My husband and I began experiencing a very high amount of dropped calls on our Nextel mobile phones. Finally after 4 months of not being able to make a cell call without it being dropped, I called to cancel. Nextel is refusing to credit the early termination fee.”

Just like Gary and Christina, many consumers are under the impression that a carrier must let you out of your contract if the service isn’t up to par. However, the contract says otherwise. In fact, a cell phone contract will go to great lengths to stipulate that the service is not guaranteed to work.

But what if you move out of the service area?

Once again, the carrier is not required to let you off without paying the ETF. Some customer service reps will waive the fee as a courtesy but much depends on which rep answers the phone. Call your carrier numerous times if needed and be prepared to back up everything you say.

The Internet is filled with ways to avoid paying the early termination fee, but the majority of ideas are at best unethical and at worst illegal. Nevertheless, there are a few ways to get out without losing a small fortune, and do it in an ethical manner.

The “materially adverse change” clause

It is an understatement to say that your contract is tipped in favor of your carrier; it's not tipped -- it's turned on its head in favor of the carrier. However, the news is not all bad: all major carriers have what is called the “material adverse change” clause.

That clause provides that, in effect, if your carrier adds a new charge to your plan, they have changed the terms of your contract. They must give you notice and then you’ll have at least 14 days to bail out without paying an ETF. If you continue to use your service beyond the “get out” date specified by your carrier, that is an indication (called negative option) that you accept their changes.

As more people have become aware of this clause, carriers have grown stricter in what they consider a “materially adverse change.” You might have to ask for a supervisor and read to them the exact wording of your notice. Make sure to use the words “materially adverse.”

In any event, this clause alone gives you a good reason to read every notice sent to you -- promptly. If you miss the notice and the 14 days passes, you're out of luck.

Transfer the contract to someone else

You can legally skip-out on the termination fee by transferring your contract to someone else, as long as you follow the rules set forth by your carrier. All major carriers allow a transfer of contract, but the carriers differ in their protocol for transfer.

For example, although the new account holder will not need to pay an activation fee, he or she will need to pass a credit check and in some cases, sign a new contract.

“It doesn’t matter if the account holder has six months or 18 months left on their contract, the person assuming the contract will need to sign a one-year contract,” said Verizon Wireless spokeswoman Georgia Taylor.

AT&T has a similar policy. Even if the account holder has only a month remaining, the receiving account holder must sign an 11-month contract from the date the transfer takes place.

Transferring your account can be a great way to avoid the ETF and, thanks to the Internet, you’re not stuck with finding someone local to take over the contract.

The cellular carrier will handle much of the transfer and it’s important to follow their instructions to the letter. Furthermore, before turning your phone over to someone else, ask your carrier how to wipe out your personal data on the phone.

You can also download instructions on how to erase phone data by visiting WirelessRecycling.com.

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