Cell Phone Carriers Agree to Ground Rules in 32 States

July 21, 2004

Wireless Satisfaction • Wireless Users Frown on Automated Customer Care • Wireless Satisfaction Slumps • Customer Churn Increasing, Study Warns • Cell Phone Users Unhappy, Survey Finds • Cell Phone Carriers Agree to Ground Rules in 32 States --- • More about Cell Phones ...

Three of the largest cell phone providers have reached agreement with 32 state Attorneys General, agreeing to provide more accurate coverage maps, give customers at least two weeks to terminate contracts without incurring penalties and improve how they market services to consumers.

The settlements, announced by Illinois Attorney General Lisa Madigan, affect almost 90 million customers nationwide of Verizon Wireless, Cingular Wireless and Sprint PCS. Each carrier will pay $1.67 million of a total of $5 million to the states to cover the cost of the investigation and to support consumer education.

“These agreements mean millions of Verizon Wireless, Cingular Wireless and Sprint PCS customers will be provided with the complete and accurate information necessary to make an informed choice about which plan best suits their needs,” Madigan said. “More importantly, if consumers are not satisfied, they now have a clear exit out of a contract.”

The attorneys general first began investigating the companies for possible violation of consumer protection laws three years ago after receiving complaints about misleading advertisements and service agreements,

Madigan said a major concern was the carriers’ coverage maps, referred to as “rate maps,” because they indicate where particular rates are available. Madigan said rate maps often were deceiving because they simply were colored-in maps of the entire United States.

Coverage was not always available in the entire calling area for a variety of reasons, including lack of cell towers, lack of roaming agreements, lack of capacity to accommodate peak call periods and obstructions such as buildings, hills and trees.

Verizon Wireless, Cingular Wireless and Sprint PCS now will be required to provide coverage maps that are as accurate as possible using current technology.

In addition, the companies have agreed to:

• Provide new customers with a two-week minimum service trial to make sure service is available when and where they need it. During the trial period, new customers will be permitted to terminate their contract for any reason without having to pay an early termination fee.
• Provide a full refund of activation fees if consumers decide to cancel their contracts within the first three days of service, excluding national holidays.
• Fully disclose the costs and limits of their wireless services in all retail, Internet and telemarketing sales.

All three of the companies said they are already in compliance with the settlement terms and have made changes in their maps and advertisements since the inquiries began.

Mobile carriers were the No. 2 industry for complaints to Better Business Bureaus last year, after auto dealers. The industry had the second-lowest consumer satisfaction ranking, beating only cable providers, in the University of Michigan's June consumer satisfaction index. The Federal Communications Commission received 21,357 consumer complaints about wireless service in 2003, and 2,133 of those were related to the way companies market and advertise.

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