GAO: Early Termination Fees Harming Consumers

New Report Shows Penalties Prevent Millions from Switching Mobile Phone Providers
Contact Info: 
Moira Vahey, 202-265-1490 x 31

WASHINGTON -- High early termination fees are a major barrier to consumer choice in the mobile phone marketplace and are preventing millions of consumers who want a new carrier from making the switch, according to a new report released on Thursday by the Government Accountability Office.

The new report, "FCC Needs to Improve Oversight of Wireless Phone Service," is a review of consumers' experience with wireless services and how the FCC is addressing consumer complaints. The report found that early termination fees stop 42 percent of consumers who want a new carrier from switching providers.

Earlier this month, Verizon Wireless announced it was doubling its early termination fee from $175 to $350. In response, Sen. Amy Klobuchar (D-Minn.) introduced the Cell Phone Early Termination Fee, Transparency and Fairness Act, legislation that would make it harder for companies to impose outrageous early-termination fees.

The report also found that the FCC "may not be aware of trends or emerging issues related to consumer problems ... or if additional rules are needed to protect consumers."

Chris Riley, policy counsel at Free Press, made the following statement:

"This report confirms that carriers are using these inflated early termination fees to lock millions into long-term contacts -- and customers want out. Consumers are being forced to pay huge fees that the phone companies just can't justify. Public interest groups, consumers, Congress, and now the GAO have all expressed concern with these fees. The FCC must act and put a stop to this anti-consumer practice that threatens innovation and competition in the mobile marketplace."

Read the report here: http://www.gao.gov/new.items/d1034.pdf

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