CALPIRG Releases New Shopping Guide for Cell Phones

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Jon Fox

Seven simple steps to save money on your cell phone bill

CALPIRG Education Fund

San Francisco, CA – It is a challenge to save money when shopping for a cell phone, but it needn’t be. The California Public Interest Research Education Fund (CALPIRG) released today a new cell phone shoppers’ guide titled Making the Right Call: A Consumers’ Guide to a New Cell Phone Plan, offering simple tips consumers can take to save money when buying a new cell phone.

“Consumers lose money on cell phone services they don’t use, overpriced plans, and fees that could be avoided,” said Jon Fox, CALPIRG’s Consumer Advocate, adding “Our report highlights simple steps to save hundreds of dollars each year by figuring out what you need, shopping around, and asking the right questions.”

Buying a new cell phone is a big expense for Californians, averaging nearly $900 per year. With nearly two-thirds of Americans paying for cell phone services they do not need or use, CALPIRG’s cell phone shopper’s guide – based on in-store research and consumer surveys by CALPIRG researchers – helps consumers save money and avoid bill shock.

“36% of cell phone customers surveyed by CALPIRG told us that their monthly cell phone bills were higher than they expected when they first signed up, by an average of $24 per month,” noted Jon Fox. “Our guide helps consumers choose what’s best for them, save on their cell phone bills, and avoid bill shock later on” said Jon Fox.

CALPIRG’s report noted seven steps consumers should take to get the best deal when buying a cell phone:

Step 1: Know your needs. Thinking about what services you use, and how much, in advance will help avoid over-paying for products you don’t need or use –saving hundreds of dollars a year. “Don’t let a sales representative upsell you things you don’t need and will regret paying for later,” warned Jon Fox.

Step 2: Shop around. The cost of devices can vary greatly whether you buy in a brand store, at a 3rd party provider (such as Best Buy), or online. It is often cheapest to look at a phone in a store and then purchase it online.

Step 3: Consider shifting from pay-per-use to packages. For example, $10 with Verizon can buy you 50 text messages per month with a pay-per-use plan. However, you can buy a $10 monthly text package in advance with Verizon and receive 1,000 text messages, paying 1¢ per message instead of 20¢.

Step 4: Compare pre-paid and post-paid services. “If you get locked into a more expensive two year contract, a free phone isn’t worth it,” said Jon Fox. Compare the plan you want with a pre-paid plan versus a post-paid plan. If you are a light cell phone user, getting a pre-paid device can save you nearly $35 each month without the hassle of a two-year contract. That is a savings of $820 over two years!

Step 5: Ask for a discount. Many cell phone companies provide affiliate discounts for students, members of credit unions, and to certain employers (universities, large corporations, public employees, etc.). For example, Sprint offers a 24% monthly discount for eligible students, while Verizon offers a 15% discount to all military veterans. “If just asking for a discount can save you $240 per year, it doesn’t pay to be shy” said Jon Fox.

Step 6: Find true costs. Consumers can reasonably expect to pay up to $20 per month on top of advertised prices for cell phones since they do not include federal and state taxes, service fees, and other overage charges. Consumers should ask which taxes and fees apply to their contract, and what their monthly base bill will look like prior to entering into a contract.

Step 7: Keep track of your monthly use, either online or on your phone. CALPIRG found that 40% of those consumers surveyed incurred overcharges. Track your cell phone use to insure that you do not go pass your pre-paid limits and incur overcharges.

The survey also outlined steps that the cell phone industry should take to better inform consumers.

“Consumers shouldn’t have to ask for the true costs of their cell phone plan,” said Jon Fox. “Cell phone companies can do a lot more to provide full-price disclosure to consumers signing up for new service simply by providing short clear summaries of contracts, pricing, and true costs.”

Specific recommendations for the cell phone industry include:

1.    Wireless companies should clearly tell consumers which taxes and fees apply to their contract, and what their monthly base bill will look like prior to entering into a contract.
2.    Wireless service providers should provide consumers with a short and clear summary of the terms and conditions of their contract, prior to signing up.
3.    Wireless service providers should increase return policy to 60 days to allow for a whole cycle billing cycle to pass, empowering consumers to assess the true cost of their cell phone service plan.
4.    Wireless companies must ensure that consumers who reviewed promotional material – or even discussed with sales staff – are provided documentation in the same language in order to avoid misunderstandings lost in translation.

To download a pdf version of titled Making the Right Call, click here.

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The California Public Interest Research Group Education Fund conducts research and public education on behalf of consumers and the public interest. Our research, analysis, reports and outreach serve as counterweights to the influence of powerful special interests that threaten our health, safety and well-being.