Lots of phone owners would like to switch carriers, but the majority are locked in for two years. No one wants to pay a large, early termination fee to break out of their cell phone contract. Enter CellBreaker, a new service that monitors cell phone contracts for legal breaches, and then notifies the consumer when they can escape without charge.
Officially launched in mid-June, CellBreaker ran a small 12-month pilot program from January 2014, and claims to have saved thousands of customers across 50 states a grand total of $160,000 in early termination fees. The marketing describes it as a “consumer justice platform,” but it’s not an altruistic service.
When you sign up with CellBreaker you’ll pay an initial $5 fee for “contract analysis.” If CellBreaker detects a breach of contract on the part of the carrier then the customer is alerted and they can switch to a new carrier within 7 days. Customers are then charged between 10 and 20 percent of the Early Termination Fee (ETF). The average ETF is $350, so with CellBreaker you’d pay $35 or $70, plus your original $5, which is a decent savings, if you’re determined to switch anyway.
If CellBreaker doesn’t detect a breach, then it continues to monitor your contract and notifies you if the carrier changes terms, which would enable you to get out of it. The 500 Startups company claims that contract breaches are common, and it can be difficult for consumers to detect them, or take action when they do, though it’s not impossible. The plan is to extend the platform in the future to cover expense tracking and help make cell phone contracts a bit more transparent.
There are also other ways to avoid ETFs, without digging into the small print of your contract and filing paperwork. For example, T-Mobile, Sprint, and U.S. Cellular are offering to pay your ETFs for you, if you switch to them right now.
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