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To avoid a cellphone bill horror story, read contract

We've all heard cellphone bill horror stories. Last week, there was the one about a Quebec woman who generated more than $60,000 in charges for tethering her daughters' laptops to a cellphone in order to connect to the Internet.

In many cases, using your cellphone as your computer's modem is a violation of the customer agreement. But in this day and age, if a carrier can detect and bill for this violation, you would think it could also prevent the connection in the first place, or at least prompt the user to think twice about it.

That seems to be the rationale for the introduction of a private member's bill by Ontario Liberal MPP David Orazietti. He wants to see greater protection for consumers and says his proposed legislation would "put an end to unfair practices by wireless service providers by requiring clear disclosure of all optional and mandatory services, including the disclosure of hidden fees and contract cancellation penalties."

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Some of the highlights of Mr. Orazietti's proposal include having cellphone companies provide service agreements in plain language; reducing cancellation fees; improving transparency regarding automatic renewal; notifying consumers when they may incur additional charges as a result of exceeding usage limits; eliminating activation dates and expiry dates on prepaid cards for wireless service; making costs more transparent when advertising the price of wireless services; and unlocking any device that has been paid for in full or is no longer bound by a service agreement.

While it's pretty hard to rack up $60,000 in cellphone charges, most of us have probably received some sort of billing shock over roaming fees, text messaging or excessive data usage. Had we really understood the nuances of our contracts, we might not have made those calls or texts or used the Internet while travelling. Usually, the only people who are aware of these extra fees are the ones who have already been burned.

My position is mixed on this issue. I support the spirit of the bill in that consumers could use some protection from contract misunderstandings that result in catastrophic fees. There is no reason I can see that such user errors can't be blocked by mobile companies.

On the other hand, I also believe that we need to spend more time digging into the contracts we sign. We're attracted to the latest and greatest gadgetry (which will be "so yesterday" about halfway through our three-year commitments), yet we often don't recognize the gravity of what we're signing. Contracts are a big deal, so treat them as such.

I don't know where this Ontario bill will go, but whatever happens, always read the fine print. It may take you the better part of a day, but that's better than paying thousands of unexpected dollars because you set your Twitter app to auto-fetch every five seconds while doing some cross-border shopping.



Preet Banerjee is the W Network's Money Expert and a senior vice-president with Pro-Financial Asset Management. His website is wheredoesallmymoneygo.com

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About the Author
Personal Finance columnist

Preet Banerjee is a consultant to the financial services industry. You can follow him on twitter at  @PreetBanerjee. You can find his conflict of interest disclosure on his website. More

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