Iowa Sues United States Cellular

"We allege that United States Cellular has used deceptive and illegal advertising practices, and then imposed illegal break-fees up to $300 if consumers tried to cancel the contract," Miller said.

"Iowa law allows consumers to cancel this kind of contract without penalty if they are unhappy, but United States Cellular fails to follow the law," he said.

"We allege that the company entices consumers to sign long-term contracts, sometimes with misleading advertisements, and then effectively prevents them from canceling the contracts by illegally imposing the hefty break-fees," he said.

"For example, the company offered 'free, unlimited weekend calls,' but our suit alleges that the company changed its definition of 'weekend' to eliminate free calls on Fridays. Then, consumers who decided to cancel were told they would have to pay the break-fee. That is illegal and it is unfair, and the advertisement was misleading," he said.

The lawsuit also alleges that U.S. Cellular advertised free offers such as free statewide calls, free telephones and free minutes, but sometimes failed to honor the offers.

The suit also alleges that United States Cellular imposed charges on consumers that were not authorized under the contracts nor by Iowa law. "Consumers who wanted to cancel because they felt they were misled or because the company imposed unauthorized charges learned they were stuck," Miller said. The lawsuit alleges that the company sometimes refused to cancel completed contracts by requiring consumers to pay their bills in full before allowing them to get out of the contract. "Imposing break-fees to keep customers in a contract they don't want to be in, and refusing to let consumers out of contracts they've completed is adding insult to injury," Miller said.

Miller said U.S. Cellular break fees are illegal. He said Iowa consumer credit law gives Iowa consumers a right to cancel "executory contracts" - contracts that are payable in more than four installments, that provide for service in four or more installments, and that defer debt. Consumers cannot be held liable for charges they have not yet incurred as of the date of cancellation, he said, regardless of contracts that might say otherwise.

The lawsuit also alleges that United States Cellular imposed other illegal charges on consumers, such as debt collection fees and attorney fees.

Miller said that his office has received over 240 consumer complaints against United States Cellular since 1993, with the bulk of the complaints coming in the last two years.

The suit says United States Cellular also unfairly denied consumers the right to file a lawsuit against the company by forcing them to go to arbitration instead, while the company ignored its own arbitration contract clause and sued other consumers in court.

The lawsuit asks the Court to order United States Cellular to stop the alleged violations, refund money to consumers who incurred losses due to the alleged violations, pay civil penalties up to $40,000 for each violation of the Consumer Fraud Act, pay up to $5,000 for each violation of the Consumer Credit Code, and pay attorney fees and costs to the State.

Miller said consumers who wish to file a complaint against United States Cellular may contact his Consumer Protection Division by calling 515-281-5926 or by writing to: Consumer Protection Division, Hoover State Office Building, Des Moines, IA 50319.

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[Note -- UPDATE : As of December 17, 2001, the case against US Cellular remains pending in Polk County District Court. No trial date has been set. A federal lawsuit filed by US Cellular to enjoin or block the Attorney General from enforcing certain provisions of the Consumer Credit Code was dismissed by the federal district court in Cedar Rapids. US Cellular has appealed the dismissal of its lawsuit and that case is now pending before the Eighth Circuit Court of Appeals.]