Consumer Law

The Two Main Types of Cell Phone Contracts

Cell phone carriers make money in two ways. They sell prepaid plans, allowing you to pay for your usage in advance. Or, they require that you sign a contract with them, agreeing to pay for a set amount of monthly usage. Contracts commit you to an extended period of service, usually two years.

Cell Phone Contracts Are Adhesion Contracts

Cell phone contracts are typically one-size-fits-all. They're called adhesion contracts, and they contain the same language for every customer. If you want the service, you have no choice but to sign the contract without any changes. There's no room for negotiation. Adhesion contracts are just as legally enforceable as any other contract you would sign.

Contracts Don't Guarantee Quality

Cell phone contracts usually don't require that the carrier provide you with excellent service. Some contain cautionary language stating that they don't have to. Contracts are typically more about what you must do during the life of your plan, such as pay your bill on time. They don't guarantee that the network will always be available or that the service will never drop your calls in mid-conversation.

Liability for ETFs

If you want to end your relationship with your carrier before your contract expires, most carriers charge early termination fees (EFT). These fees can be several hundred dollars. If your plan covers more than one phone, your carrier will typically multiply the fee by the number of phones. To get out of your contact early, you'll have to pay this money. Your contract is legally enforceable, and as long as your contract includes terms for an ETF - and most do - the carrier can sue you in court to collect.

You Have Some Rights

Customers do have some rights. You can legally break your contract without paying an ETF if the carrier introduces a "materially adverse" change to the contract. Materially adverse changes usually involve small extra fees that didn't exist at the time you signed the contract, or rate changes. If you agreed to pay $110 a month when you signed the contract, your carrier can't increase the rate to $115 after a few months, unless the contract mentions the potential change. If not, the contract becomes void and you can usually get out of it. You can also argue in court that the terms of your contract are misleading or grossly unfair. However, these lawsuits are difficult to win. You'll probably need the help of a lawyer.

Special Considerations for the Military

Federal law exempts some servicemembers from ETFs. If you're deployed or relocated to a new base, and your cell phone service doesn't work there or you are not allowed to use the phone there, the carrier cannot charge you an ETF.

A Consumer Law Attorney Can Help

The law surrounding cell phone contracts is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a consumer law attorney.

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