CELL PHONE SERVICE: CUTTING THE CORD CAN TIE US UP.

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CELL PHONE SERVICE: CUTTING THE CORD CAN TIE US UP.

When Lori Swanson first became Attorney General, the United States was embroiled in two wars with large numbers of military personnel posted overseas. In World War II the country adopted the Soldiers and Sailors Relied Act. The Act postponed most civil lawsuits against a soldier until the soldier returned from service. The Act deferred most proceedings involving breach of contract, bankruptcy, foreclosure, or divorce. This meant that a G.I. who was paid substantially less than the market salary didn’t have to be distracted in war due to litigation.

Unfortunately, the Act addressed contracts involving products, but it didn’t necessarily cover service contracts. In 1940, there were few service contracts that a family would purchase on a monthly basis. By 2000, service contracts were the most prevalent consumer transaction, involving cellphones, internet service, telephone contracts, sports clubs, membership contracts and the like. Responding to service member’s concerns, Lori contacted cellphone companies and requested that they honor the spirit of the Serviceman’s Act and defer billings or collections on contracts which were worthless to a user in Afghanistan or Iraq. Many of the companies declined, so Swanson drafted and got enacted a bill to require deference by the companies for servicemen on active duty. The indifference by these cellphone service providers not only applied to the military but also to the civilian.

When it comes to broadband, internet, telephone service, and cellular technology, there is not a lot of difference in the service that is understood by the average consumer. The result is that companies may market their service at a reduced rate and thereafter change the terms or pad the bill with extra trimmings once the sale is completed. For instance, one “hidden fee” on a cable bill is equipment rental for the cable modem or cable box. While the consumer may pay a rental fee that exceeds $100 per year for the modem, the purchase price on a new modem is generally less than $100.

And, because the cost of the technology tends to decrease with time, the companies do their best to automatically renew old contracts, in many cases exposing the consumer to additional undisclosed termination fees.

In 2007, Swanson filed a lawsuit against Sprint Communications for imposing “termination fees” which were never disclosed to the consumer. Sprint discontinued the termination fee. Soon, other communication carriers followed suit.

Yet problems with the communications industry never subsided.

Swanson thereafter encountered a barrage of consumer complaints, this time with CenturyLink. In May of 2017, Swanson filed a lawsuit against CenturyLink, pointing to experiences where the customer was given one quote for a base monthly fee but then was charged up to double the amount when the bill arrived. In discovery, Swanson found records quoting CenturyLink’s own employees who claimed that less than one in five customers were given an accurate quote. In October of 2017 CenturyLink agreed to a consent order regarding future price quotes. As to refunds, the litigation remained pending at the time Swanson left office.

Similarly, Swanson received a number of complaints against Comcast. In December of 2018 Swanson completed a two-year investigation of Comcast (or Infinity as it was then called) and filed a lawsuit which stated that Comcast deceptively hiked prices and misled thousands of residents about the actual cost of their cable and television services. Swanson alleged that the company wooed customers with low rates and then quietly raised the rates, tacked unwanted equipment and services onto bills, and failed to send $200 Visa gift cards offered in its lucrative promotional deals. Swanson described the technique of adding unwanted charges as “flying under the radar.” Swanson noted the added fees can change a customer’s quoted package by upward of 30%. The lawsuit was still pending at the time Swanson left office.

References:

  1. Van Oot, Torey, “Comcast sued over pricing practices,” StarTribune, December 22, 2018, Page A1.
  2. “Minnesota Attorney General: CenturyLink must disclose fees”, St. Cloud Times, October 31, 2017, Page 2A.
  3. https://arstechnica.com/tech-policy/2019/01/the-lies-comcast-allegedly-told-customers-to-hide-full-cost-of-service/
  4. Chavey, “Minnesota might try to force CenturyLink restitution in overbilling for tv, internet,” Pioneer Press, October 30, 2017.
  5. Chavey, “Minnesota AG sues CenturyLink, alleges overbilling of customers, July 12, 2017.
  6. https://www.twincities.com/2017/07/12/minnesota-ag-suing-centurylink-alleges-overbilling-of-customers/
  7. https://www.startribune.com/minnesota-attorney-general-sues-centurylink-over-billing/434082273/
  8. “Swanson: CenturyLink must disclose fees under order,’ Minnesota Lawyer, November 2, 2017.
  9. Nelson, TJ, “CenturyLink Ordered to Reform Billing Practices in Minnesota, KVRR, October 30, 2017.