Cellphone Insurance Crusader--By Accident
Sometimes a problem has to hit home to trigger change. For Maryland Attorney General Douglas Gansler, that happened when his 13-year-old son lost his cellphone.
Gansler had purchased a cellphone insurance policy intended to replace lost, stolen or broken cellphones. Under the insurance plan, the Ganslers paid a monthly fee of around $5. But when his wife called Asurion Protection Services, the company providing the insurance, to request a replacement phone, she was told she would have to pay a $50 deductible. She also learned the replacement phone may not be brand new--it may be a refurbished handset.
Gansler said he wasn't aware of the policy terms, and spoke with many other Marylanders who've had similar experiences. So he's spent the past eight months brokering a deal with the four major wireless carriers. AT&T, Verizon Wireless, Sprint Nextel and T-Mobile, who all provide insurance through Asurion, have agreed to provide more information about the policies to consumers before they agree to buy the service.
"If the customer was actually aware of what they're purchasing, they would not purchase it," Gansler told me via cellphone after hosting a press conference in Rockville.
He said he wasn't sure how many formal complaints his office has received about problems with cellphone insurance coverage, but "everyone I talk to has dealt with this."
Gansler went on to say that Asurion does disclose the terms in a brochure given to customers when they buy the policy. But he never got around to reading it.
"I'm 45 years old and I've never read through one of these 35-page pamphlets with fine print," he said.
Asurion, which handles the premiums and claims for underwriter CNA, said its policy terms, such as the monthly fee, the deductible amount and the condition of the replacement phones, have always been disclosed, either by a brochure at the point of sale or a follow-up postcard sent to new customers.
Gansler "has stated on many occasions that when he purchased a cellphone, he never read the brochure that he is complaining about, which fully disclosed all the key terms of the policy," said Lanny Davis, an attorney for Asurion. "In fact, he has repeatedly said, 'I never read brochures.' The brochure he used at the press conference was not the one made available to consumers, which he probably did not realize because, as he says, he doesn't read brochures."
I checked with the Attorney General offices of other states that have a history of taking action on wireless issues.
The Illinois office has a record of four complaints, three of which were mediated and resolved. The Attorney General of Texas is not currently looking into this issue, a spokesman said. But the office has taken steps to reduce general deceptive billing practices by cellphone companies in the past.
The agreement Gansler secured with the wireless companies will provide more prominent notice of the policy terms in stores and on Web sites. Customers will also sign an acknowledgment that they've seen the terms. Some salespeople will be retrained. The agreement is currently effective in Maryland only, but Asurion said it will take similar actions nationwide.
Asurion also agreed to donate a total of $1.5 million to the carrier-sponsored charities with a presence in Maryland, such as Sprint's Project Connect, which supports online safety, and T-Mobile Huddle Up, an after-school program for kids of single parents.
I asked Gansler if he has a particular interest in other wireless consumer issues. He said there were no plans in place as of yet.
"This is the biggest issue that has come to our attention," he said.
April 4, 2008; 4:51 PM ET
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