Congress To Investigate Abusive Debt Collection By Wireless Providers

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News Posted: Fri, Oct 15 2010 1:38 PM

The House Oversight Committee wants to put the kabosh on abusive debt collection practices by wireless service providers. It is launching a probe, lead by committee chairman Rep. Dennis Kucinich (D-OH), into a contract clause that forces customers to waive their rights to sue and instead agree to forced arbitration.

With forced arbitration, the parties agree that they will abide by the decision of the arbitrator, no matter what that decision is. The probe is an extension of a similar investigation by Kucinich's Domestic Policy Subcommittee into the credit card industry. Last week, the 16-month-long probe resulted in nine banks removing forced arbitration for debt collection, seven of them dropping the forced arbitration from their contracts altogether.

Kucinich is now turning his attention to the debt-collection practices of the major cell phone service providers, he said in a statement released Thursday by the Oversight Committee. He did not name the providers.

"Most wireless service providers have forced their customers to settle disputes through a process called mandatory arbitration. Providers require consumers to give up their Constitutional right to use the court system in service contracts that consumers sign as a precondition of receiving wireless service with that company," the statement said.

“The Domestic Policy Subcommittee investigated the practice of debt-collection arbitration and found that forced arbitration is arbitrary—the results depend more on the arbitrator to whom the case is assigned than the facts or the law that applies,” said Kucinich. 

It's been a heck of week for the poor wireless companies. This probe follows news that the FCC is looking into new rules to prevent "wireless bill shock" which would require phone companies to warn users when they've gone over their contractual minutes and are about to rack up what I like to call "penalty fees."

The two actions combined could be nice protection for consumers. The FCC rules would help mobile phone users avoid the big bills causing a debt-collection problem in the first place. If Kucinich's probe succeeds, wronged users will be given back their right to fight the situation in court.

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3vi1 replied on Fri, Oct 15 2010 5:24 PM

I've never liked the idea that a contract could be used to allow you to give up constitutional rights. It's an abusive practice inflicted by huge corporations on people who can find no other reasonably equal alternative.

Next thing we know, we'll have health care institutions putting clauses in our HMO contracts to void items from the Declaration of Independence.

"We're sorry, we can't cover your cancer treatment because you opted out of Life. We can allow you Liberty and the Pursuit of Happiness, though."

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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realneil replied on Sat, Oct 16 2010 12:17 PM

It's been a happy road to prosperity for the Cell providers. They make an incredible amount of money each year and those nasty contracts are part of the reason why. They all have phones made on the cheap (real stinking cheap) in Taiwan, and then tell use that it's a four hundred dollar phone, but we'll give it to you for two hundred if you sign your life away to us for two years. (they bought it for $35.00 most likely because they buy 20,000 of them at a time)

This has resulted in profits of hundreds of billions of dollars per year, per provider!

And NOW Uncle Sugar steps in?,..................

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AjayD replied on Sat, Oct 16 2010 10:56 PM

I appreciate the sentiment behind the recent litany of attempts toward consumer protection, such as the Credit Card Act of 2009. However, I fear most of these measures will turn out to have been in vain.

Unfortunately, companies (large, highly lucrative ones especially) don't take very kindly to forcibly imposed changes to their business model that result in diminished profit margins. One need only look to the newly enacted and prospective changes made to the way health insurance companies are allowed to operate to see that the first order of business for these companies is to quickly invent alternative ways of reclaiming their lost profit.

 

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^by rising other fees and cutting out the bottom line, and workforce... 

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wil2200 replied on Sun, Oct 17 2010 6:05 PM

america had a chance to elect this guy and they laughed at him instead - he seemed to be the best out of the D's lineup

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3vi1 replied on Tue, Oct 19 2010 6:40 PM

I don't know a lot about him, but Kucinich has always seemed to be on the more informed, intelligent, side of technology issues (at least those of which I'm aware). Unfortunately, he was unelectable due to the kids always trying to get his Lucky Charms.

In his favor, he also wins the "smoking hot wife" vote.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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