For Immediate Release

Organization Profile: 
Contact: 

Moira Vahey, 202-265-1490 x 31

GAO: Early Termination Fees Harming Consumers

New Report Shows Penalties Prevent Millions from Switching Mobile Phone Providers

WASHINGTON - High early termination fees are a major barrier to consumer choice
in the mobile phone marketplace and are preventing millions of
consumers who want a new carrier from making the switch, according to a
new report released on Thursday by the Government Accountability
Office.

The new report, "FCC Needs to Improve Oversight of Wireless Phone
Service," is a review of consumers' experience with wireless services
and how the FCC is addressing consumer complaints. The report found
that early termination fees stop 42 percent of consumers who want a new
carrier from switching providers.

Earlier this month, Verizon Wireless announced it was doubling its
early termination fee from $175 to $350. In response, Sen. Amy
Klobuchar (D-Minn.) introduced the Cell Phone Early Termination Fee,
Transparency and Fairness Act, legislation that would make it harder
for companies to impose outrageous early-termination fees.

The report also found that the FCC "may not be aware of trends or
emerging issues related to consumer problems ... or if additional rules
are needed to protect consumers."

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Chris Riley, policy counsel at Free Press, made the following statement:

"This report confirms that carriers are using these inflated early
termination fees to lock millions into long-term contacts -- and
customers want out. Consumers are being forced to pay huge fees that
the phone companies just can't justify. Public interest groups,
consumers, Congress, and now the GAO have all expressed concern with
these fees. The FCC must act and put a stop to this anti-consumer
practice that threatens innovation and competition in the mobile
marketplace."

Read the report here: http://www.gao.gov/new.items/d1034.pdf

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