September 26 2007 by Ellen Roseman
I often write about the financial cost of signing long-term contracts for cell phones and trying to leave early. This prompted a reader, Bijan Shahrokhi, to start a new business. Here’s his story.
An article of yours about wireless providers forcing subscribers to stay in contracts by having large cell phone cancellation fees encouraged me to come up with a solution. Thatâ€™s why I established a website that helps cell phone subscribers leave their contracts without paying cancellation fees.
I help them find individuals whoâ€™d like to take over their cell phone contracts. Once the ownership transfer is completed, the original subscriber is completely free of the contract without paying cancellation fees. And the new subscriber just got himself or herself a short-term cell phone contract without any payments for the SIM card, activation or a new handset.
We have already helped more than 100 people leave their cell phone contracts without paying cancellation fees in one month. Here is the link to my website.
Curious about this new business, I asked him if the phone companies ever got tough on the transfers. And if the new owner defaulted, would the phone company try to collect from the original owner? Here’s what he said.
Actually, the phone companies are in favour of it. There are many reasons why they would like this idea.
–We help the wireless provider replace an unhappy client with a happy client at no cost. The happy client will spend more money on the plan by using more minutes and features.
–The original subscriber is able to leave the contract on good terms, raising the possibility of his or her return to the provider in future for other services.
–Most importantly, now it is the job of the original subscriber to obtain a new client for the provider, saving the carrier a few hundred dollars on acquiring a new customer.
About extra fees, Rogers and Fido allow contract ownership transfers for free. Bell charges a one-time $20 transfer fee and Telus charges a one-time $25 transfer fee. Compare that with termination fees: minimum $100 to a maximum of $400 or even $720 (Telus).
Once the ownership transfer is done, the new subscriber is responsible for the contract and the original subscriber is completely out of the contract and has no responsibility whatsoever. In fact, even if the new person defaults, there is no liability for the original subscriber.
After one month, the feedback has been much more positive than we’d originally thought. We havenâ€™t even had any reports of having major problems with transferring cell phone contracts.
LeaseBusters has been very successful in helping people with long-term car leases get out early without stiff penalties. It started in 1990 and is still going strong, despite competition from others. Let’s hope this cell phone version is equally helpful and profitable.