Bill mandates full disclosure of mobile telephone contracts

THE current lack of clarity and uniformity in mobile telephone contracts and bills which leads to consumer confusion has prompted a lawmaker to file a bill to protect the welfare of end-users.

Rep. Lord Allan Jay Velasco (Lone District, Marinduque) filed House Bill 6334 mandating mobile telephone service provider to furnish subscribers with written notice of change in rates, terms or conditions of service at least 30 days prior to such change is to take effect.

“Mobile telephone contracts do not clearly and uniformly disclose to the customer the relevant terms and conditions, including charges, minutes, service plans, taxes and surcharges,” Velasco said.

Velasco said such practice impedes the delivery of basic information necessary for consumers to compare the cost of mobile telephone services offered by different carriers.

The lawmaker added that competitive markets function properly only when consumers have access to accurate, meaningful information in a format that they readily understand.

Velasco said mobile telephone companies often charge early termination fees whenever a customer ends his or her service before the expiration of the contract.

“In many instances, the same fee is charged regardless of whether the contract is terminated a day or a year after it is signed so long as the contract period has not expired,” Velasco said.

Velasco explained that the term of contract is often extended whenever a customer makes a change in the service, so an early termination fee may apply after a customer first subscribed to a company’s service.

“Early termination fees imposed in this way, do not bear a strong relationship to legitimate business practices such as recovery of the cost of a mobile telephone device,” Velasco said.

Velasco added that customers very often are unaware that their contracts can be extended based on changes, often minor changes, to their service and modified in materially adverse ways.

The bill to be known as the “Mobile Phone Consumer Empowerment Act,” directs mobile service providers to inform subscribers of any change in rates, terms, or conditions of service that will result in higher rates or more restrictions on service or otherwise result in a material, adverse change for a subscriber.  Such subscriber, may terminate the service without penalty and receives a pro rata refund of the charges, if any paid for the handset used for such service within the day of the date of effectivity of such change.

The mobile service provider shall inform the subscriber of his right to terminate the service and to a handset refund, the procedures to be followed for such termination and the subscriber’s right of rescission.

Under the measure, a contract for mobile telephone service may be cancelled upon the request of a subscriber for any reason, 30 days subsequent to the execution of the contract.

In the exercise of the subscriber’s right of rescission, there shall be no penalty or other costs to be imposed on the subscriber, except that such subscriber shall be responsible for the cost of the mobile telephone service used during the time period the contract was in effect.

When a subscriber returns any purchased or leased handset pertaining to the acquisition of mobile telephone service, a subscriber is entitled to a pro-rated refund of any amount paid for the handset.

The measure mandates the Department of Transportation and Communications (DOTC) through the National Telecommunications Commission (NTC) to effect the implementation of the law.

“The State recognizes the need to protect the welfare of each end-user as consumers, shield them from deceptive, unfair and unconscionable acts and practices, provide information and education to facilitate sound choice and the proper exercise of rights by the consumer,” Velasco said.


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