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Cheers to bill that would limit cell phone fees for consumers

Feel like you're chained to your cell phone company because of high contract termination fees?

Some in Congress want to do something about it.

U.S. Senator Amy Klobuchar (Minn.), Senator Russ Feingold (Wis.), Senator Jim Webb (Va.), and Senator Mark Begich (Alaska) have introduced the Cell Phone Early Termination Fee, Transparency and Fairness Act.

The legislation follows Verizon Wireless' decision to double their Early Termination Fees from $175 to $350 for certain subscribers who end their contracts early.

The bill would set limits on Early Termination Fees (ETFs).  It would also require wireless providers to pro-rate ETFs and clearly notify customers about the fee, not only at the time of purchase, but for the duration of their contracts.

Early Termination Fees can be budget-busters.

In the wireless phone business, the combination of long term contracts and substantial early termination fees -- that range from $150 to $350 -- have the effect of keeping customers from switching providers, even when those customers are dissatisfied with their service or move their work or home to areas with inadequate service.

"Changing your wireless provider shouldn't break the bank," said Klobuchar. "Forcing consumers to pay outrageous fees bearing little to no relation to the cost of their handset devices is anti-consumer and anti-competitive."

Added Feingold:

"Consumers should not be punished with exorbitant cancellation fees if they want to change cell phone service providers. This is a basic issue of fairness.  Just as I was successful in eliminating unfair termination fees for service members deployed overseas, I hope to find the same success with this common sense proposal."

The bill would:

Prevent wireless carriers from charging an ETF that is higher than the discount on the cell phone that the wireless company offers consumers for entering into a multi-year contract.

For example, if a wireless consumer enters into a 2-year contract and receives a $150 discount with the contract, the ETF cannot exceed $150.

Require wireless carriers to pro-rate their ETFs for consumers who leave their contracts early so that the ETF for a two-year contract would be reduced by half after one year and pro-rated down to zero by the end of a contract term.

Require wireless carriers to provide "clear and conspicuous disclosure" of the ETF at the time of purchase.

Require monthly billing statements to clearly state the pro-rated fee customers would be charged if they terminate their contracts before the end of the next billing cycle.