AT&T has finally gotten around to following Verizon Wireless’ footsteps to fewer customer returns as it joins Big Red cutting “no hassle” returns to just two weeks.

Starting this month, if you return a phone to AT&T within 14 days, the company will charge you a $35 restocking fee or 10% of the purchase price for accessories over $199. Return it after 14 days and you may not be hassled, but you will be out as much as $325.

Consumers (including Individual Responsibility Users) – Device/Accessory Returns

Cosmetic blemish items are considered closeout items and are not eligible for return or exchange. 

Frontier Communications has found a new way to make a little extra from customers who disconnect their Internet service.

According to a document obtained exclusively by Stop the Cap!, Frontier will charge a $9.99 “Broadband Processing Fee” for new customers shutting off their Internet service starting Nov. 1. Customers that order Internet service from Frontier after Oct. 1 are supposed to be notified about the new fee during a review of their order. Existing customers are not affected.

This fee is above and beyond any early termination fees contract customers may face for ending service before the end of a service contract.

According to Frontier, broadband services subject to the new fee include:

• DSL
• “Simply Broadband” (broadband-only service)
• FiOS Data
• Frontier Satellite Broadband
• Frontier Tandem (VoIP)
• Wi-Fi (Commercial accounts only — basic, sponsored hot spots, etc.)

Frontier has dealt with PaymentOne for years. This bill shows unauthorized cramming charges billed to a Frontier customer in the fall of 2010.

An Oregon man found himself facing $300 in early termination fees from Frontier Communications after the phone company first refused to intervene on his behalf and credit his account for unauthorized “phone cramming” charges.

Tim Curns was with Frontier since the 1990s, but not anymore.

“I pulled the plug,” Curns told KGW-TV after unsuccessfully trying to get Frontier to help remove an unauthorized charge from his land line phone bill.

Curns found a $14.95 charge on his bill from something called “PaymentOne.” When he called Frontier, they could not tell him what the charge was for and at first refused to credit him for the unauthorized charge. That is surprising because Frontier has been billing customers on behalf of PaymentOne for more than two years.

With Frontier uninterested in investigating the phone cramming incident, Curns was told he would be on his own trying to stop PaymentOne from billing his phone line every month.

Curns tried to tackle the problem himself, first calling PaymentOne and learning the company had enrolled his line for the service despite having the wrong mailing address on file. Frontier, upon learning that, eventually agreed to a one-time courtesy credit but could not promise additional charges would not be forthcoming the following month.

Engraged, Curns said if Frontier could not stop unauthorized charges, he could stop being their customer. At that point, the Frontier representative surprised Curns with news he was unknowingly committed to a two-year service contract, and he could cancel his service… if he paid around $300 in early termination fees.

That would leave PaymentOne with their money, Frontier enriched on an early termination fee the customer never knew he would owe, and little left in Curns’ wallet.

“My question to the phone company was, okay, if you make an adjustment on this bill for 14.95 what are you going to do to stop this from being a recurring charge,” Curns said, “and they said there’s nothing they can do, you have to call these people.”

So Curns called and said PaymentOne told him the name of that company is My Global 4-1-1, which is a front company for a firm called Doink Media LLC, which the Federal Trade Commission been chasing all over the country.

Kyle Kavas, Spokesperson for The Better Business Bureau said, “most of the time it’s just companies that are randomly picking out phone numbers and charging them. Those cramming charges are very dangerous because they come from companies that are usually scammers.”

KGW received this less-than-helpful statement from Frontier:

“Frontier takes customer concerns very seriously and always tries to make things right. Our normal policy on a ‘cramming’ issue, which is an unauthorized charge on a customer’s account, is to assist the customer in contacting the 3rd party company who added the charge. These 3rd party companies get a customer authorization from the customer although in some cases the customer doesn’t realize they’ve authorized the charge. An easy way to avoid these is to have a 3rd party block put on your account by calling Frontier Customer Service.”

Curns called Frontier and learned although the company does not currently charge a fee for third party charge-blocking, it might in the future.

What Frontier doesn’t admit is that it earns a piece of the action from every phone cramming charge found on a customer’s bill.

Curns ultimately decided to pull the plug on Frontier for good, paid a pro-rated early termination fee, and recommended other customers follow in his footsteps before unauthorized third party charges make their way to another phone bill.

For now, customers can call Frontier customer service and request all third party charges be blocked from your phone line. The service is free of charge, although there are no guarantees it will always remain that way. It would also be a good time to review your current account and learn if Frontier has put you on a contract plan with an early termination fee attached. If you did not authorize this, demand it be removed from your account at once. If you did authorize it, have Frontier note your account that you do not want it automatically renewed at the end of the term, a practice Frontier regularly engages in, and note your contract expiration date.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KGW Portland Frontier Cramming 6-26-12.mp4[/flv]

KGW-TV visits with Tim Curns to discuss Frontier’s “look the other way” attitude about phone cramming charges.  (2 minutes)

When broadband customers sign up for service under a “price protection agreement,” also known as a “term contract,” “minimum commitment,” or “price-lock guarantee,” few consumers realize their broadband provider will typically renew the contract for an additional one to three year term automatically “for your convenience.”

These Automatically Renewable Contracts (ARCs) require customers to notify their ISP, typically in writing, at least 30 days before their term commitment expires to prevent the provider from renewing the agreement, subjecting customers to stiff early cancellation fees if they want to change providers.

Now the independent UK regulator and competition authority Ofcom has ruled those agreements deliver few benefits to the consumers locked into them and plans to ban them effective Dec. 31.

Richards

Ofcom’s chief executive Ed Richards said: “ARCs raise barriers to effective competition by locking customers into long-term deals with little additional benefit.”

At least 15 percent of British broadband consumers are currently signed to renewable contracts, which have been used by BT, Adept Telecom, Axis Telecom, Eze Talk and iTalk.

“Our research, in particular the econometric analysis that we commissioned on the switching behaviour of BT customers, indicates a clear causal link between ARCs and reduced levels of consumer switching,” Ofcom said in a statement. “We believe this effect stems from the opt-out nature of the process for contract renewal and that any example of such a contract is likely to be harmful to consumers and to effective competition.”

Providers love the auto-renewing contract because most customers long forget about them until they call to cancel service, at which point they face a stiff cancellation fee that can run into the hundreds of dollars.  Faced with that kind of exit fee, many consumers opt to stay with their existing provider, despite better offers from a competitor.

The contracts are also popular in North America, particularly with telephone companies who face increased competition from cable providers.  If a telephone company DSL product loses the speed war with an area cable competitor, holding customers in place with term contracts assures phone companies consumers will stay put.  The more services bundled into a customer contract, the higher the termination fee, especially if a signup bonus was provided.  Phone companies have tried offering free netbook computers, free satellite television, and free HD televisions as part of contract bundles that can last as long as three years.  Some have cancellation fees of up to $500 if a customer leaves early.

Ofcom hopes the retirement of these contracts will encourage consumers to shop around for the best possible broadband and landline deals that serve their specific needs.

Any consumer who has ever paid an early termination contract cancellation fee to a wireless carrier might feel a little satisfaction today knowing AT&T’s languishing deal to acquire T-Mobile comes with its own $3 billion dollar penalty payable to Deutsche Telekom if the merger fails to come to fruition.

Sachin Shah, merger arbitrage strategist with Tullett Prebon Americas Corp., suggests that $3 billion dollar fee (and the spectrum giveaway that goes with it) delivers a real incentive for AT&T executives to find a way to force the deal through, and their next venue will likely be federal court in the District of Columbia to keep the government from getting a preliminary injunction against the merger deal.

For AT&T, any legal action will certainly cost far less than $3 billion dollars, so the company has little to lose rolling the dice trying to find a remedy in a district court that has become increasingly business-friendly.

Shah believes yesterday’s announcement by the Justice Department also provides additional paths for AT&T to consider:

• Renegotiate the deal: AT&T could go back to the bargaining table with T-Mobile and return to the DOJ with an amended proposal it hopes will be more acceptable to the government’s antitrust lawyers;
• Reboot the lobbying campaign: AT&T could claim scuttling the deal will cost American jobs — a particularly sensitive topic with unemployment around 9 percent;
• Re-engage AT&T Employee Unions: The Communications Workers of America are true believers in the AT&T/T-Mobile deal, if only because it is likely to broaden union membership to include T-Mobile workers.  Shah thinks the unions might speak to a more receptive audience among certain union-friendly lawmakers who have also been concerned AT&T will use the merger to clear-cut T-Mobile’s employees.

Shah thinks the Justice Department has not entirely slammed the door shut on AT&T’s proposed merger, and there have been precedents of DOJ lawyers changing their minds.

Meanwhile, the Federal Communications Commission, quieter than a church mouse ever since the deal was announced, apparently found cover from the DOJ decision, and FCC Chairman Julius Genachowski delivered his own “me too” statement hours after the Justice Department announced their lawsuit:

“By filing suit today, the Department of Justice has concluded that AT&T’s acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws,” Genachowski said. “Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg DOJ Lawsuit Not Unexpected 8-31-11.flv[/flv]

Sachin Shah says the U.S. Justice Department’s lawsuit to block AT&T Inc.’s proposed $39 billion takeover of T-Mobile USA Inc. does not mean the deal is dead.  He speaks with Lisa Murphy on Bloomberg Television’s “Fast Forward.”  (5 minutes)