Cell Phone Contracts

It seems there are as many places to buy cell phones as there are people with cell phones!  But not all these shops are the same, and the difference can cost you big.

"We were approached by a person at a kiosk." And Bobby Rink liked the deal he was offered, so he bought three cell phones, only to find out, he couldn't get a signal at home. "We didn't get coverage. We could sit in our living room and the phones wouldn't ring."

When he tried to return the phones, he says the store refused and slapped him with $900 in fees! Why so much? Bobby didn't realize it, but he had signed two contracts.

Bobby bought his phones from what's called an "authorized agent" - an independent store - not owned by a service provider.

Michael Shames, Utility Consumer's Action Network: "The authorized agent often will require you to sign an additional contract requiring this additional early termination fee."

Consumer advocates say most people have no idea they could be signing separate agreements for the provider and the store. "The average consumer generally has no clue that the store that they're buying from is an authorized agent, and most don't appreciate that they may end up paying substantially more in terms of early termination fees."

The Wireless Association says there are thousands of authorized agents and many don't require a second contract.  And, the group says, either way, the stores have a lot to offer.

John walls, The Wireless Association: "You might have four or five or six different services, different rate plans available all under one roof, as opposed to going to a store or a carrier store that has just that carrier's product."

Jeff Trujillo is with Advantage Wireless, an authorized agent with 15-hundred shops coast to coast. He says while less than 10% of their stores require separate agreements, it's no big deal.

"A, it's a small percentage of dealers that do it and, B, it's really just a way to help the small business owners protect themselves a little bit."

So, what's the best advice when shopping for your next cell phone?  First, know who you're dealing with.

Janee Briesemeister, Consumers Union: "You should ask directly whether you're buying direct or from a dealer." And... know what you're signing!  "You especially need to read all the details of the contract or service agreement very carefully to look for these additional cancellation penalties, activation fees, any other terms that might be different than the ones you might've seen in the national advertisements."

Cell shoppers should also deal with companies that offer risk-free trial periods, usually 14 or 30 days, to avoid stiff cancellation penalties.