Cell phone in a Verizon store.
Cell phone in a Verizon store. - 
Listen To The Story


Scott Jagow: What's the most annoying thing about cell phone companies? It's probably gotta be those contracts and the penalties. Well, things might change on that. Jeff Tyler explains.

Jeff Tyler: Cell phone providers say it's only fair to charge customers up to $175 when they cancel their contracts early. Companies say the fees cover the costs of all those cut-rate phones.

That's not how Bob Williams with Consumers Union views the fees:

Bob Williams: These are used by the phone companies as a way to keep their customers locked up.

Dissatisfied customers have filed class-action lawsuits in several states. The industry wants the Federal Communications Commission to give it immunity.

Again, Bob Williams:

Williams: It would give them billions of dollars in protection. In California, Cingular, not so long ago, had to give people their early termination fees back under.

In return for legal protection, the phone companies would let customers drop cell phone service in the first month without penalty. After that, any cancellation fees would be prorated.

Williams says the industry isn't giving up much. Some companies, like Verizon, already offer these services.

I'm Jeff Tyler for Marketplace.

Follow Jeff Tyler at @JeffMarketplace