When Good Phones Go Bad

What to do when your wireless handset breaks down and you don't want to pay a high termination fee or buy a replacement at full price

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Sarah Struck, 24, was caught by surprise when her six-month-old Verizon Wireless mobile phone began malfunctioning. It would conk out after mere minutes of use and then couldn't pick up a signal, even in cell-tower rich midtown Manhattan. But when she tried to take it into a Verizon Wireless store to get the malfunctioning phone replaced, she was in for a real shock.

The store wouldn't exchange or fix the phone, and the sales associate said she was to blame for the malfunctions, she says. "They told me I'd dropped my phone in water," she says. "But that never happened." Her options included buying a new phone at full retail price, signing up for another two years of service with Verizon Wireless, or simply terminating the plan and paying a cancellation penalty of $175.

She considered buying a low-end phone instead, but the cheapest one in the store retailed for $160 and she was reluctant to lock herself into another two-year contract. "I felt like if there was a problem with the phone, it should be their responsibility to replace it," she says. "I didn't do anything wrong."


  Struck's dilemma is one facing luckless cell phone customers all the time. A phone dies or gets lost, broken, or stolen. If it's uninsured or the malfunction isn't covered by a policy or warranty, the customer has to pay either a high contract-cancellation fee, or more for the replacement than the original. "Coast to coast, I've heard about this problem from consumers," says Morgan Jindrich, director of the Consumer Union's HearUsNow.org, a group that advocates for wireless users. "Their phones stop working, and then they feel blindsided by the costs."

Wireless carriers say that charging customers more for replacements is only fair. They recoup low promotional prices through monthly phone bills from customers who take out a contract. Plus, wireless carriers offer insurance for customers willing to pay an additional monthly fee.

"The customer is getting a very advanced device that can take pictures, send text messages, have calendars, and make phone-calls anywhere in the United States, plus an infrastructure to service the account," says Tom Pica, a spokesman for Verizon Wireless, which is owned by Verizon Communications (VZ) and Vodafone (VODA). "It isn't cheap." The termination fee, he says, is necessary because it protects against customers getting a phone for cheap and then bailing out, costing the company money.


  The Consumer Union takes issue with termination penalties. In December, 2005 it started a letter-writing campaign to urge the Federal Communications Commission to investigate the practice as well as the levying of "other hidden fees." So far, wireless customers have sent more than 5,000 letters to the FCC, Jindrich says.

What if it happens to you? If a spiffy new Motorola (MOT) Razr or Palm (PALM) Treo isn't in your immediate future, there are other options. First, you can evaluate the cheaper, entry-level phones offered by the carriers. These models probably won't have built-in cameras or Bluetooth, but several have decent voice quality, and do a good job with the basics.

Second, you can look to buy a refurbished or used model. Several sites on the Internet specialize in selling refurbished phones, and many used models are available on eBay (EBAY). If you're lucky, an acquaintance might have an old phone that's collecting dust. In all cases (so long as the phone is compatible with the wireless network), the carrier will set up these phones on your plan at no charge or for a small fee. Plus, it's friendlier to the environment than letting an old phone end up in a landfill.

Third, you can try to negotiate a deal with the carrier to get out of paying full price. If you don't want to sign another two-year agreement, write a complaint letter to your wireless carrier's customer service department, in hopes of negotiating a better discount, or getting the phone replaced, says Jindrich.


  Jindrich advises that, in addition to writing the letter to the company itself, customers should copy the letter to relevant departments at the FCC, the Better Business Bureau, the Cellular Telecommunications & Internet Association, and their state attorney general.

"None of the cell phone companies want to have their names spread around as not being responsive to consumers, so when they see the regulatory bodies attached, they're more likely to pay attention," she says. While your phone may be out of commission, it doesn't mean you can't have your voice heard. As for Struck, Verizon Wireless said it would look into her case.

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