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Oct 03, 2006 - 11:45 AM

Lose Your Cell Phone, Kiss Your Credit Rating Goodbye

by Judy Dugan
Buried in a slew of last-minute vetoes by Arnold over the weekend was SB440 by Sen. Jackie Speier, which would have protected Californians whose cell phones are lost or stolen from being forced to pay up to thousands of dollars for fraudulent calls.

The measure was opposed primarily by cell phone companies, including Cingular, T-Mobile, Sprint Nextel and Verizon. These companies and their merger partners have given Arnold at least $376,000 in campaign contributions.

Arnold said in his veto message that the state is already protecting consumers from such payment demands. If that's the case, why would cell phone companies still tell people calling to report a stolen phone that they are liable for any charges made before the theft was reported? What if you're on vacation and it's stolen from your home?

Current law is hazy, saying that users are liable only for calls they made or authorized. Cell phone companies have interpreted this to mean that any call made from the phone before the owner reports a loss or theft is legally authorized.

In one instance cited by legislative analysts, a Cingular customer went on an overseas vacation last year and believed she left the phone in her apartment. When she returned three weeks later she discovered the phone missing. A week after that, she was notified that there were $26,000 in charges on the phone, up from her usual $50 a month -- and she was responsible for paying them despite the theft. She contacted Cingular repeatedly and was told, among other things, that she should consider filing for bankruptcy. Late charges piled up, she got calls from a collection agency and her credit rating was threatened, she said in a CBS TV interview (When CBS called Cingular, the company backed off its demand).

In another instance, a customer reported her phone stolen one day after the apparent theft. Several days later, her company told her she had $1,700 in charges on the phone and was liable for all charges made before she reported the theft.

SB440 would have specifically allowed customers to offer evidence that the calls were not authorized, and prohibited cell phone companies from demanding payment, sending the bills to collection, or reporting nonpayment to credit bureaus until an investigation of the disputed calls was completed. The companies would also have to make these rights clear in their bills to customers. Arnold said that printing these words on the bill would be a "great undue burden" on the companies.

Not surprisingly, the Gov vetoed the bill on Saturday, at a time when few people were paying attention and at the final moment for such vetoes.

While cell phone companies showered the Gov with cash, Consumers Union and State Atty. Gen. Bill Lockyer, the chief backers of the bill, lost out because they merely offered a strong argument for the rights of cell phone customers. In Arnold's world of pay-to-play politics, a good idea doesn't stack up against a big check.

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