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September 27, 2006

Governor Blagojevich to introduce legislation forcing cell phone companies to be honest with their customers about costs
Illinois would be first state in nation to prohibit phony regulatory charges on cell phone bills

Cell phones are the number one source of consumer complaints

CHICAGO – Governor Rod R. Blagojevich today announced he will propose legislation to protect cell phone users from misleading charges that appear on monthly bills as government mandated fees or taxes.  Most cell phone companies pad their bills with these phony charges appearing as “regulatory compliance fees,” “administrative charges,” or “regulatory cost recovery charges.”  These secret surcharges unfairly increase the costs of wireless service beyond the advertised rate.  The Governor’s legislation will require that cell phone companies identify all charges and prohibit surcharges disguised as taxes or mandated fees.
“Cell phone companies are hitting their customers with phony charges that run up the bills, and that has to stop,” said Gov. Blagojevich. “Consumers deserve better than this.  They have the right to truthful billing.  Our legislation will force cell phone companies to charge the advertised price – without adding phony surcharges.”
As seen below, many companies have administrative or regulatory fees that drive up the price to consumers:
Name of Charge
Cost to Consumer
Administrative Charge
Regulatory Charge
Regulatory Cost Recovery Fee
US Cellular
Regulatory Cost Recovery Fee
Federal Cost Recovery Fee
up to $2.83
Regulatory and Administrative Fees
Regulatory Cost Recovery Fee
Telecom Connectivity Fee
According to the Better Business Bureau, cell phones are the number one source of consumer complaints.  The Governor’s legislation will require cell phone companies to include their normal costs of doing business in the basic charges for service, instead of tacking on extra charges masquerading as taxes or government mandates.  This will prevent deceptive marketing, allow customers to make informed choices among the different phone company offerings, and promote fair competition in the wireless industry.
“This nickel-and-diming of cell phone customers must end,” Lt. Governor Pat Quinn said.  “Consumers are entitled to know what they pay for, and we need to safeguard everyday people from being unfairly burdened with phony fees.”
Under federal law, cell phone rates are unregulated.  However, a recent court ruling affirmed that states have the authority to protect consumers from unfair billing practices.  If the Governor’s legislation is passed, Illinois will become the first state in the nation to prohibit bogus line items on cell phone bills.  Usually amounting to $1 per month or more for each line, these false surcharges are estimated to cost Illinois consumers $127 million per year.
Regarding cell phones, Gov. Blagojevich has taken aggressive steps to protect private information from identity theft, including proposing and signing legislation this year that made Illinois one of the first states in the nation to outlaw “pretexting”, an unlawful practice that allows an individual pretending to be an account holder to obtain cell phone records, long distance call records and other personal records.


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