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A couple of months ago, I received a phone call from an agent marketing Sprint's cell phone service. I knew that I had two weeks under Federal law (and 30 days under California law, until Schwarzenegger's PUC appointees repeal it) to cancel service without penalty. In fact, I had no intentions of using the service at all, I just needed to be able to verify what company had made the telemarketing call.

I subsequently canceled the servicce, but even after credits were applied, there was still a balance due of about $40. I called Sprint, and after wrangling with the customer service rep, she agreed to wipe those charges off, since I had not actually made any calls whatsoever. But it became clear that Sprint is involved in some highly questionable practices:

  1. When a phone is sold as a "new service", the phone is "activated" immediately, and monthly charges begin to accrue. In the case of a phone which is shipped to the customer, this is before the customer is able to use the phone.
  2. Federal and California state law provide a period during which any penalty fee shall not apply. But some cell phone companies charge an activation fee.... Sprint's procedures apparently allow the phone to be activated even though the customer has not have consented to it, and/or without providing the customer notice of an activation fee. Though the activation fee applies whether or not the agreement is canceled before the term of the agreement, it is similar to a penalty in that it results in a substantially higher average monthly cost if you keep your phone for a relatively short period. Not requiring cell phone companies to refund the activation fee would allow them to completely circumvent this law.
  3. Under certain circumstances, customers may not have had the opportunity to see all material terms and conditions of their cell phone agreement. Without having such an opportunity, those terms and conditions cannot be binding. Rendering a bill for fees when Sprint has no reason to believe that these fees were previously disclosed is fraudulent.

I spoke to someone at Sprint, who gave me this incredible explanation when I pointed out that material terms and conditions were not disclosed at the time I agreed to the service that I had immediately canceled:

The terms and conditions are disclosed when you receive your bill.

Like that does any good. They tell you the terms and conditions after you enter into the agreement, and based on that later notice, they claim that you are responsible for charges and feeds based on terms that had never been previously disclosed. Huh????

It occurs to me that this issue is often true with telemarketers (and some other sales situations as well)... whether they're selling cell phone service, magazine subscriptions, vacation certificates, etc.: if you didn't receive disclosure of all material terms, then either the contract is not binding or the undisclosed terms are not binding.

So if you should get suckered into a contract to buy 4 years of magazines (because of that free "diamond watch" and the big savings), this may something to add to the claim of fraudulent inducement as a reason why the contract is not enforceable.

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Revision r1.1 - 04 Feb 2005 - 01:23 by EliMantel web search for EliMantel
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