AT&T Scam: Landline Early Termination Fees

I have recently noticed that AT&T has quietly begun to tack on Early Termination Fees to landlines. As a cell phone user, for many years, I am cognizant of Early Termination Fees by cell phone providers, but it appears that one of AT&T’s reactions to its eroding market share by cell phone and VoIP service providers is to quietly add Early Termination Fees to its landline customers without their active and knowledgeable consent.

One of my company’s core services is to provide managed telecommunications solutions to our customers; as such I have dealt with AT&T and its counterparts by requisitioning telecommunications services from simple, single-line telephone numbers to broadband internet connections. Therefore I have many years of experience dealing with the telecoms and their processes.

I have seen and dealt with the idiosyncrasies of giant conglomerations in Mexico and the United States and especially their monopolistic attitudes in the 80’s and 90’s. What AT&T is doing now is nothing more than a fraud designed to milk as much money as they can from consumers before their monopoly completely erodes and they have to figure out how to make money honestly.

The scam, like all scams, works on people’s busy lives and the concept that if only a few fall for our scam then it lines our pockets.

It starts with the friendly telephone operator happily taking your telephone order constantly trying to upsell you an additional service you really don’t need but hey, it’ll save you money in the long term; “who knows you might need it”. If you insist that you just need a “plain, simple telephone number with no call waiting or long-distance service”, the operator will happily fill your request not once telling you that there will be early termination fees in the future. In fact the term is never mentioned.

As with any scam, the less information you give the customer up-front the less chance they have of starting to price and feature compare, which is where AT&T will always fail.

Then you begin to deal with the monopolistic attitude of a monolith whereby getting a telephone line installed at your office requires that you wait patiently for a four-hour window where the tech might stop by to install the line; “time permitting”. Notice that at no time was the “Early Termination Fee” mentioned.

I know perfectly well that the more complex telecommunication connections such as T1s and cellular service require term contracts and therefore Early Termination Fees are amply spelled out. I have no problem with those because, as an informed consumer, I make an affirmative decision to contract and pay the penalty for moving before the term expires. The key, here, being an affirmative decision to enter into a contract that requires a penalty for cancelling before the term expires.

In terms of landlines, AT&T doesn’t want to clearly spell out Early Termination Fees because then the scam will not work. You see, if you tell the consumer that they need to contract with a pre-determined period of time, then getting a landline is no longer a simple matter, but one of, wait maybe I should shop around a little before I commit.

So how do they get away with it? Obviously there is an upside to this for AT&T, if not why bother. It’s simple; businesses are in transition today, going from the traditional fixed-land line to converting to other providers via cellular or VoIP service for their telecommunications. During this transition businesses are still trying to determine the best course of action. This transition is the reason why AT&T is relying on a scam to shore up their eroding revenues because their infrastructure is unable and their corporate culture is unwilling to compete fairly in the marketplace.

The scam works this way. Sneak in the language of Early Termination Fees buried in pages of legalese and little post cards advising you; “thank you for being a valued customer” and, by the way, we are happily renewing your service for another year, oh and guess what, since we value you as a customer so much, we are letting you know that if you decide to cancel we’ll tack on an Early Termination Fee.

There is no affirmative agreement on your part or consent to accept the Early Termination Fee, but after all it is a scam so why bother with business ethics and fairness? As a business owner you make the move to improving your bottom line and make the switch to another telecommunications provider to be more efficient. Sure you asked AT&T if they could match the price point or even provide the service and they could do neither. So after spending hours jumping from AT&T representative to AT&T representative to make the switch, you finally convince them to cancel your account. The helpful AT&T representative takes the cancellation order and conveniently tells you that you will receive a final bill in the mail.

A few weeks later, it arrives. It conveniently tells you that you are paid up for services rendered since AT&T, like all telecommunication companies, charges you for service BEFORE you actually consume it, but wait, there is a balance due any way. It is a fee for “agreement termination”. Yup, it’s an Early Termination Fee for canceling a landline.

Here is the genius to scam. Most businesses contracted their telephone lines years before and paperwork and the person that contracted the service is probably no longer with the company. And even if they were, it is probably the owner who is too busy with the business day to day operations that recollecting who they spoke to or what they signed is not worth the effort.

But guess what, there is no paper signed by the business that says; “yes, I agree to pay Early Termination Fees”. Most companies would rather pay the outrageous fee rather than face the threat of being referred to an outside collection agency. You see, AT&T is so egregious about their scam that they conveniently mention on their bill that this is your final bill and that “it is IMPORTANT that you pay the final balance no later than the DUE BY date” or there will be consequences.

The scam, like all scams, works on ignorance and therefore AT&T doesn’t want you to take the time to scrutinize the bill, much less think about it. So most companies pay and move on. The fact that some companies choose to pay the scam does not make it right.

The economy and the business world are in a state of ever evolving flux as technology and world-wide economic stresses have made it necessary for businesses to streamline their operations in order to remain relevant in today’s economic climate. Giant conglomerations struggle, like small businesses, but as industry giants their resources mean that they can get away with scams individuals will likely face jail time for.

In the case of AT&T’s landline Early Termination Fee scam, the most likely outcome is that eventually, if ever, they will be faced with a class-action lawsuit where they pay cents on the dollar to settle the case, with the majority of the monies going to attorney fees. The consumers who paid the fees will get no relief and AT&T, even after paying the penalty, if any, will still have benefited from the monies it collected from the scam through increased stock options/prices, interest earned from banked money and “legal fees” deductions on their corporate tax returns.

And, if an enterprising attorney doesn’t decide to pursue a class action lawsuit then the monies collected are banked for AT&T’s shareholder benefits. AT&T benefits from the scam regardless of, and if, they are ever called on it.

Can you do anything about it?

As a realist I know that there is really nothing anyone can do about it. It is the nature for government to perpetuate consumer fraud by ignoring it or paying lip service to it. It doesn’t do government any good to go after the same people that feed it on a daily basis, so it continues. A small business man would likely face jail time for the same fraud, but a giant, like AT&T, will be ignored by government oversight therefore further encouraging them. It is easier to throw an individual, with little resources, in jail rather than to hold a company, like AT&T accountable for the same scam.

The only thing we can do, as consumers, is to call them on their fraud and demand written proof of your company’s “affirmative” agreement to enter into a contract with AT&T whereby your company agreed to pay Early Termination Fees. Absent that, well, would you pay a person that walked up to you and told you; “you owe me $100 for walking on my street”?

That’s exactly what AT&T is telling you when it demands an Early Termination Fee for a land-line you cancelled that doesn’t have a signed contract attached to it. But, as a giant unethical conglomerate, they have the resources to make your life difficult by legal terrorism through threats of lawsuits and referrals to collection agencies.

So, if you decide to embark in this assertion of your rights and correct a wrong, document, document and document everything. More importantly respond to each and every letter you receive and do not engage anyone in a discussion about the merits of your argument. Rather force them to contact you via correspondence in order to properly document your actions.

Like all scammers, documentation is the worst nightmare for the scammer, so once AT&T realizes that you are on to them they will quickly move on to the next victim.