WASHINGTON Two senators introduced a bill on Tuesday to prohibit wireless companies from having clauses in contracts that prohibit consumers from suing the companies because of hidden fees or other contract disputes.
Senators Richard Blumenthal of Connecticut and Al Franken of Minnesota introduced the measure, which would ban the common practice of putting clauses in wireless phone and data contracts that require consumers to use binding arbitration in the case of a dispute.
The proposed legislation is in response to a U.S. Supreme Court ruling in April that an AT&T unit could enforce a provision in its customer contracts requiring individual arbitration and preventing the pooling together of claims into a class-action lawsuit or class-wide arbitration.
The plaintiffs in that suit, a California couple, filed their class-action lawsuit in 2006, claiming they were improperly charged about $30 in sales taxes on cellphones that the AT&T Mobility wireless unit had advertised as free.
"This bill makes sure that Minnesotans have the ability to hold their mobile service providers accountable if they are cheated. It also ensures that any dispute resolved through arbitration is truly voluntary, and that consumers are not being forced into it," Senator Al Franken said in a statement.
Companies generally prefer arbitration as a less expensive way of settling consumer disputes, as opposed to costly class actions, which allow customers to band together and can result in large monetary awards.
Some consumers have complained of things like being charged for data even when applications are disabled or their mobile device is turned off.
Wireless companies either declined comment or could not be reached for comment.
The CTIA-The Wireless Association, a trade group for wireless companies, called the legislation "misguided."
"If the sponsors really want to help consumers, they should spend less time on stimulating the market for trial lawyers and more time working to free additional spectrum that can be used to deliver world-class wireless broadband service to American consumers," the group said in a statement.
(Editing by Carol Bishopric)