If you’re searching for a way out of your two-year cellphone contract without paying hundreds of dollars in fees, the contract itself is not a great place to look. It’s long, it’s complicated and the few loopholes it mentions aren’t useful to most people.
But there are a handful of tricks to wiggle out of a contract without taking a big hit to your wallet, though it will take some effort.
Early termination fees were designed to help wireless carriers recoup the discount they provide on phones. While those fees can run as high as $350, all the major phone companies cut back the cost depending on how long a customer is in a plan. For example, AT&T’s early termination fee for a smartphone starts at $325 and goes down by $10 every month.
If you want to avoid that cost, here are some ways out:
Transfer your contract
One of the easier ways to walk away from a contract is to find someone else to take on the commitment. All the major wireless carriers allow people to transfer their plans to someone else, and websites such as CellTradeUSA.com and CellSwapper.com cater to that need by working as matchmakers.
Both sites allow people stuck in contracts to post ads that specify their plans and months remaining in hopes of finding takers. You don’t have to include your device in the deal, though it can help attract a taker. At CellTradeUSA, there is no initial cost to publish an ad, but contract owners need to pay $20 to see responses. CellSwapper, instead, has an upfront fee of $3 to $11 to post an ad. At both sites, those seeking contracts can use the service for free.
Those looking to take on these unwanted plans benefit from getting a fairly new device, sometimes for free, at a shorter obligation time than a full two-year contract and without an activation fee. The contract owner also may offer a cash incentive to sweeten the deal.
CellTradeUSA co-founder Eric Wurtenberg said the site has 300 to 400 listings at any given time and has a success rate of about 50%, with the listings that offer the best deals on the most desirable phones moving in just a few days. After a match is made, the contract owner and taker need to go through a transfer process with the cellphone company, which can include a fee. (AT&T, for example, charges $18 per line if you call customer service, but nothing if the transfer is done online.) CellTradeUSA noted that users rarely face fraud issues because the carriers have both the buyer’s and seller’s personal information.
Know Your Limits
Report spotty service
This method only works if you are actually having problems with your service. The network providers will try to troubleshoot service problems. Sometimes those issues are easily resolved with a minor phone software upgrade, but if the troubleshooting doesn’t work, people are allowed to leave a contract without the fees.
Nonetheless, few customers likely get free passes from early termination fees because of service issues. A Sprint spokesman declined to comment on how many people get these waivers, though noted that service issues are handled on a case-by-case basis and “absent extraordinary circumstances” it expects people to abide by their contracts.
Verizon Wireless spokesman Tom Pica said, “Coverage issues are not common especially in urban, suburban and for that matter most rural communities.”
Vickie Oldham, a state-university communications director in Georgia, signed a two-year contract with Verizon Wireless in early 2012 to get an iPhone to use at her second home in Parrish, Fla. She never got service in or around her home there and said she called the carrier twice a month for about a year to try to resolve the problem. Fed up, she stopped paying the bill around April this year and soon after found the unpaid costs on her credit report.
“I’ve been paying the bills for services that I have not enjoyed and they just have me locked into this contract that you can’t get out of,” she said.
Mr. Pica, the Verizon Wireless spokesman, said he couldn’t comment on specific customers but added that the company expects people to go through a troubleshooting process before it will waive its early termination fee.
Report a move
If you’re moving out of a service area, you may be able to leave your plan.
Jennifer A. Slater, a former paralegal from Hull, Mass., said she was able to escape all four lines of her family plan without early termination fees after she moved to Derby, along the upper edge of Vermont, where her carrier, T-Mobile, had no towers.
“I should’ve moved here ages ago,” she said. “It really worked out well.”
Military personnel who relocate for at least 90 days to an area that doesn’t have service are allowed under the federal Servicemembers Civil Relief Act to terminate their plans without penalty. Contract suspensions for those in the armed forces are also possible.
Cancel early
Verizon Wireless, AT&T and Sprint all say in their contracts that customers can avoid early termination fees by canceling their plans within a trial period—usually 14 days—or if the carriers make a major change to the contract. But seeing how the carriers are well-aware of their own contract loopholes, such changes can be rare.
One other option is to avoid the contract altogether. All the major phone companies provide prepaid options, as well as the opportunity to buy a phone at full retail price and pay on a month-to-month basis. T-Mobile in March got rid of its two-year plan and is now touting that month-to-month option.
University of Chicago Law School professor Omri Ben-Shahar, who studies consumer law and consumer protection, said that compared to a few years ago, cellphone consumers are now much more informed and have more choices, so anyone interested in avoiding termination fees can do so more easily. While early termination fees may be burdensome for some, he said, if they didn’t exist then neither would discounts on phones.
“It is a tradeoff,” Mr. Ben-Shahar said. “And while we tend sometimes to focus on the travails of those who want to switch and are stuck and have to pay a stiff penalty, we less often notice the reduction in price that is enjoyed by everyone else.”