March 13, 2009 at 9:00 AM ETIf you're wondering why mobile phone carriers get away with imposing blatantly unfair policies, there's a simple reason: No one stops them.
If the carriers were to be stopped, the Federal Communications Commission would be doing the stopping. But when a carrier is accused of misbehaving, the FCC has a simple procedure for adjudicating the claim: It simply asks the cell phone company if it's guilty. When the answer is "no," the case is closed.
Imagine a world where judges simply ask defendants accused of stealing if they are guilty. The jails would be pretty empty. So it is with cell phone companies. I know this first-hand. Let me share my story of an encounter with the FCC's kangaroo court after a deeply troubling incident of being billed for months after I'd closed my account.
In December, I canceled my Sprint cell phone after several years of service. I had nothing against Sprint, but I had finished my contract, my handset had broken and I simply found a better deal.
I called on Dec. 4 to close my account. The operator obliged me, but told me I owed $48.65 for my last month of service. I questioned the amount, noting with some conviction that of course my final month would be discounted, as I would only have to pay through Dec. 4.
I was wrong.
My billing cycle ran through Dec. 15, I was told, and I had to pay through that day. Never mind that I couldn't use Sprint's service during those 11 days. I had to pay for them.
I protested and spoke to a manager. She told me the same story. Last-month bills aren't prorated, I was told. That was "policy."
"How could this be?" I wondered aloud. Bills are prorated at the beginning of the contract,
why not the end? When home phone service is canceled, the service is prorated. And most important, how could a cell phone company force me to pay for something I wasn't using?
It turns out that all major carriers have the same policy. Let's call it the "kick-your-customer-out-the-door" policy. This is the worst kind of gotcha transaction, because the consumer has absolutely no leverage at all. In this case,
I can't bargain in good faith over the price of this "kick-you-out" fee. What would I do, threaten to cancel my service?
Filing a complaint
I had only one possible recourse: complain to the authorities. After all, it's up to the FCC to make sure telecom companies operate on a fair playing field. Just because a company says something is "policy" does not mean it's right. What if Sprint said I had to surrender $100, or $500, or my first-born child to quit the service? Surely, someone has the authority to step in and draw a line.
You might think me naive to imagine the FCC would help. But I was trying not to be cynical. So I paid the outstanding bill to make sure nothing ended up on my credit report. Then on Dec. 5, I dutifully exercised my consumer rights by visiting the FCC Web site and filling out the online complaint form. I did not identify myself as a reporter. I simple wrote as a consumer who, after being treated poorly, was seeking redress. I immediately received an e-mail indicating my complaint had been received.
Then I didn't hear anything else. A day, a week, a month went by. Still nothing.
On Jan, 13, I called the FCC to ask about its complaint process. In this case, I identified myself as a journalist. Before the day was over, a high-ranking official from the FCC's Consumer Inquiries and Complaints Division called and talked to me on background.
He said most complaints were handled within 20 days, but conceded that "every once in a while, something can take a little longer."
But he assured me I was in the queue for what he called the FCC's "informal complaint process." The agency would forward my complaint to Sprint and encourage Sprint to settle the matter with me directly.
On Jan. 30, I received an e-mail from an "analyst" in Sprint's Executive & Regulatory Services department. She asked me to repeat my complaint. I replied to her e-mail explaining my situation, and got this deflating response.
"If services are terminated before the end of the billing cycle, we do not prorate monthly service charges. ... We regret that this may not have been explained to you; however, this information is provided in our Terms and Conditions of Service," her note said.
But that wasn't all. There was also this troubling conclusion:
"In addition, based on my research, your account is currently in an active status and was not terminated. If you would like to terminate your account, it will be necessary to speak with you directly."
Soon after, I received a new e-mail from Sprint: a bill for $104! The customer service agent who insisted that I pay $48 to close my account had never closed my account.
The Sprint analyst and I swapped e-mails for the next two weeks. She said I had to speak directly to her on the phone in order to cancel my account, but I was busy working and missed her calls. Then she didn't answer mine, and then she went on vacation for a week.
During this stretch, on Feb. 11, Sprint replied to the FCC with a simple message: "Please be advised that Sprint advertises and provides services in monthly increments. …The monthly charge is valid." The letter was signed by the analyst I'd been communicating with. It said she had tried to contact me on "three different occasions" but was "unsuccessful."
At this point, unlike my first encounter with the FCC, the agency responded with incredibly efficient haste. Within two days, a follow-up letter was mailed.
And I opened it, I was hoping my government stood at the ready to fight for my rights. I hoped for a tough-as-nails reply. I was disappointed.
"The information in the company's response appears to address the issues raised in your complaint. Therefore, we are closing your case," it read.
Closing my case? What about truth, justice and the American Way? What about judicial proceedings? What about my side of the story? What about basic fairness? Wasn't someone at the FCC going to consider my claim that this "policy" was unfair?
And oh, there's the biggest question of all: Who is the judge here, Sprint or the FCC?
Here I was, more than two months after calling Sprint, with my case closed but my account still open. I looked more closely at the Sprint letter to the FCC. It included this really disturbing sentence.
"Upon completion of our review, we determined during a subsequent call on December 4, 2008, Mr. Sullivan contacted our customer service department and requested to postpone the account cancellation," it read. "As such, the account remains active and continues to incur monthly service charges."
I could hardly believe my eyes. Who calls back after complaining about cancellation charges and "postpones account cancellation?"
From earlier reporting I've done, I know many call centers have perverse incentives for employees. Bonuses are often based on the number of people who are talked out of cancellation, for example. Sometimes, customer service agents or their managers flat-out lie.
I don't know why Sprint failed to close my account on Dec. 4; it could have been a clerical error. But it is troubling that a review by Sprint's Regulatory Services group didn't immediately recognize the obvious error, and instead passed it along to the FCC as part of its argument against me.
To the Sprint analyst's credit, when I reached her by telephone a few days later, she quickly closed my account and canceled the $104 bill. One wonders how much harder that would have been if I hadn't found my way into Sprint's regulatory affairs office with my other complaint.
Meanwhile, she offered only cold comfort for my original complaint -- paying for a service I could not use.
She apologized for any inconvenience, but said that if the firm prorated final-month charges, it would have to send out refund checks, which would be inconvenient for Sprint.
Whose side are you on?
If you want to know why U.S. companies seem to run rough-shod over consumers on a regular basis, now you do: federal regulators hold the door open for them. The inconvenient truth of this tale is that the FCC seems to simply do whatever the telecommunication firm tells it to do -- in this case, close my case.
In our prior conversation, the FCC official had indicated that I might be better served by filing a petition for rulemaking at the FCC, so the agency could consider a more general rule about end-of-service situations. Forgive me if I am now cynical about that route.
I did have one other option. The letter I received from the FCC said that if I was "dissatisfied" with the company's response I had the right to file a "formal" complaint within six months. So I went back to the FCC's site and dug around for the rules on formal complaint procedures.
Alas, there was a catch: formal requests require payment of a $190 filing fee. That's even more than Sprint's early-termination fee.
When the people of a nation have nowhere to turn for justice or redress when treated unfairly, cynicism sets in. If the Obama administration is truly interested in restoring the confidence of U.S. consumers, it needs to deal with the lawlessness of this Wild West we are being forced to live in. President Obama needs to send us a sheriff who will do more than simply enforce punishments handed out by corporations.