Congress To Investigate Abusive Debt Collection By Wireless Providers

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.