I terminated my cell phone service, but where’s my credit?

Lavan Reddy has to pay for a month of AT&T service he won’t use after canceling his service. Is that fair?

Question: AT&T is charging me for service I haven’t used. I need your help with a refund.

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Four years ago, when I signed up for my AT&T wireless account, I knew I would be charged an early termination fee if I ended my contract early. But they didn’t tell me everything.

I found out the rest when I switched from AT&T to T-Mobile. My contract with AT&T was ending on Nov. 17, but I terminated it on Oct. 7 to avail an offer with T-Mobile.

Here’s the thing: AT&T charges their customers in advance. In my last billing on Sept. 24, I paid the charges for the month of October. Since I terminated my contract on Oct. 7th, I was ready to pay the termination fee, but I was supposed to get credit for the services I did not use from Oct. 8 through Oct. 24.

My bill on Oct. 24 doesn’t have any credits. I contacted customer care and all they said was AT&T’s policy is not to give the remaining credit.

I asked them to send the policy details, and they told me that they would email me. They haven’t sent it yet. All that I should pay is an early termination fee and any taxes. I’m ready to pay those. AT&T owes me $50. Can you help me get it back? — Lavan Reddy, Annandale, Va.

Answer: AT&T should have explained its refund policy before you signed up, so that when you canceled your service, you could do it at the right time. Its terms of service are outlined on its website.

According to AT&T, you have 14 days to terminate your wireless contract for any reason and without penalty. After that, you agree to pay AT&T for “all fees, charges, and other amounts incurred and owed under your Agreement along with the applicable [Early Termination Fee].”

The way I read that, you would have to pay for any usage until the cancellation. But the way AT&T reads it – at least according to the oral and written communication with the company – is that since it bills you in advance, all pre-billed services are considered a valid charge.

Here’s the thing about contracts. It isn’t just knowing the rules – it’s interpreting them. And the company doesn’t just get to write the terms but it also gets to say what they mean, which can be a little maddening to the average wireless customer.

I note that while you did send some written correspondence to AT&T, you failed to escalate this to a higher level. Those managers are all available on my website.

We just updated our AT&T Wireless contacts, so you should have no trouble getting through to the right person.

This is yet another reminder that you need to review all the terms of your wireless contract before you decide to break it. Companies use a lot of carrots to get you to sign up and sticks to prevent you from leaving. Don’t let the door hit you on the way out. It can hurt.

I contacted AT&T on your behalf. A representative called you and agreed to refund the $50 for October. Enjoy your new T-Mobile service.

Should Lavan Reddy have paid for the month he didn't use?

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44 thoughts on “I terminated my cell phone service, but where’s my credit?

  1. Just because a company or business can interpret its contracts, doesn’t mean that interpretation would hold up in court. AT&T is just betting that the additional revenue will outweigh the losses incurred in court.

  2. If they’re charging him an early termination fee, no he shouldn’t have to pay. If they didn’t, I would consider it something like paying rent and giving a 30 day notice.

  3. I decided to read the AT&T terms and conditions before commenting. I clicked the link in your post and read a lovely quote from Salvador Dali.You say I made a beautiful error or are you saying AT&T made the beautiful error???

      1. It is not my thing anytime of the day. But I loved the beautiful error as well as the Dali quote and will shamefully plagiarize them with abandon in the future!

  4. Heh, AT&T is still pulling this stunt.

    This is not new. They’ve been pulling this stunt for at least a decade. Even before the current AT&T was, well, AT&T.

    And even if you’re out of the contract, they’ll still try to get an extra month out of you.

    My solution, when I left them some 15 years ago (after they somehow managed to overload their towers in the middle of NYC, so you can’t actually make phone calls during the day because the towers were 100% full) is to simply not pay the next month in advance, and cancel at the end of the month.

    This was that episode where they eventually sold the bogus charge to some dumb debt collection agency, and I had an opportunity to have some fun with them.

    This seems to be the only practical way not to get scammed: make sure you don’t end up paying money you don’t have to, in the first place.

    1. That works great until you go to get a mortgage. And then that little charge against your credit rating will bite you.

      I had a bogus $175 charge from Cox Cable sent to collections, and reported to Experion. (They said I never returned a cable box, but I did and I had proof.) That one ding on my credit dropped my perfect credit score to the low 600s, and I couldn’t get the mortgage I wanted because of it! It took me six months to get the credit agency to restore my credit. (We were eventually able to buy the house, but we almost missed it because of this mess.)

      So unless you are positive you will not care about your credit rating for the next 7 years, I would advise against doing this.

      1. Even the scammiest collection agency vermin know that they could get into hot water if they break the rules.

        If you properly dispute the debt according to the FCRA, they are legally prohibited from reporting it. If they do, and after you formally dispute it with the credit reporting agency, they maintain that it’s “verified”, you can go after them.

        I never said to ignore the debt collectors entirely. I don’t have many debt collector disputes in my history, but I have had a few, and helped my family members in a few cases. We never had any bogus debt reported to any agency. Were we lucky? Maybe. But also maybe it’s the fact that the debt collector’s demand letter was responded to, in writing (and not by phone), via certified mail, within the statutory 30 days, using the statutory dispute verbiage from the FCRA, had something to do with it.

      2. I am guilty of doing that to a person, however it was legitimate in my case. When I worked A/R, I had a customer who owed money, well I had many. With this particular customer I worked out a payment plan to avoid sending him to collections and he stopped paying when he owed $150 about 10% of his original balance. I tried to contact him to no avail and eventually sent him to collections. Whomever answered the phone told the collection agency he was dead, after multiple attempts they returned the account as uncollectable. Two years later he calls me and says he got denied a mortgage becuase I reported him to the credit bureau. He paid, I sent a note to the bureau, and he got his mortgage.

  5. We’re also discussing this one on the forums today. Here’s the link. Hope you’ll stop by and join the discussion. As a reminder, we have some pretty cool tools to create a more robust online community, plus we don’t hold any of your posts for moderation.

    I’m not gonna call it a free for all, but it’s a slightly more freewheeling discussion. See you there!

  6. I just canceled service for a deceased relative who was then on month-to-month service. A check for the unused portion was promptly sent without issue. Of course, this wasn’t AT&T, but the other one.

  7. I had the same issue with Verizon wireless. If you port your existing number prior to the end of your billing cycle the major carriers will not refund your money. I switched from Verizon to T-Mobile last year and could not get them to refund the money even when I escalated to corporate (instead they sent me a contract with the highlighted provisions). Word of advice to the consumer that you advocated for… T-Mobile has the same policy, even without a contract if he/she ports before their cycle ends they will lose their prepaid amount. It sucks, but it is in all the contracts (and made very clear when I switched to T-Mobile).

  8. Chris, you aren’t looking at the correct part of the agreement. You were looking at the part about the contract length, rather than the part about monthly billing. The relevant language is rather unambiguous.

    Section 1.5: How does AT&T Calculate My Bill?

    …Except as provided below, monthly Services and certain other charges are billed one month in advance, and there is no proration of such charges if Service is terminated on other than the last day of your billing cycle…

    1. I saw that. I didn’t see this as a proration issue. They billed a month in advance even though the contract was already terminated. At least that’s how I (and the other editors reading the story) saw it. But AT&T’s systems saw it differently, so maybe this was a proration problem, after all.

      1. Hi, it seems that ATT cycle is from 24 to 24 each month so the company billed before the customer termination (october 7) and the customer expected partial credit as it is said in the blog (from oct 8 to oct 24) which in my opinion it shouldnt have been applied given the script in section 1.5. Anyway, good gesture from the company.

        1. If I misread the contract, then it might have been nice for AT&T to point that out when it responded to either one of us. But I’m glad this was resolved. I don’t think people fully understand billing cycles. I may need to write something about that in the future.

  9. Chris didn’t read the right part of the agreement; the correct part of the agreement (section 1.5) isn’t up for interpretation. It clearly says there won’t be any pro-rating.

        1. If you ever want to speak to a billing systems expert, I’m you man. The 10 years of financial systems consulting I have mentioned, was primarily billing systems. Imagine making these systems based upon all the different contracts, its very interesting, and a lot of work.

  10. It’s not all that different north of the border – one really needs to tease out the fine print every way to Sunday, and call the carrier to get their interpretation. Having decided to terminate my, at the time, service with a carrier, I began researching the various cell phone packages when a deal came up 1-1/2 months before my old contract’s end date. I sucked it up and had 2 contracts going for a short time. Same thing with my late husband’s contract – the cancellation fee was more than the cost of carrying the contract for 6 months until it inched closer to the end of the contract period and they agreed to cancel with 30 days notice with no penalty.

  11. Moral of the story, do not pay your bill early, and if you are expecting to change service, do not pay it and discuss the amount you actually owe with a billing person.
    I did this with Time Warner Cable (absolutely the worst company I have ever dealt with) on my cable service when I switched to AT&T U-Verse. I did not pay the last month and instead contacted their billing department to pay for the services I got until I cancelled. Instead of a $140 bill as they were sending me, my total was $80.

    1. Oh I SOOO hear you about Time Warner Cable. We recently were looking at buying a house, and I was doing some checking into which cable companies served the area. I called TWC just to price out their options, and the pushy sales guy kept trying to close for an appointment. I must have told him a dozen times that we don’t even own the house yet…we hadn’t even decided whether or not we were going to buy it! I had to give him the address so he could check what service packages were available, but I made it clear we didn’t live there.

      The next week we went off on a three week vacation in Bali. Upon our return, as soon as I got to LAX and turned on my phone I discovered that my voice mail box was crammed full of messages from TWC about my supposed appointment! Calls to confirm, calls to let me know what time, calls from the installer because I wasn’t there, calls to tell me that I was going to get a $50 cancellation fee! My voice mailbox was maxed out, so I have no idea how many messages from friends & family I missed.

      I called them and ripped the agent a new one, and told them that even if we do move there, I would never choose them because of this horrific display of poor service.

      But it gets worse. We buy the house, and it turns out that TWC is the only cable company in the area that provides the level of internet service I need to be able to work remotely (which I do two days a week). So now we’re all moved in, and are stuck doing business with TWC. Ugh.

        1. I don’t know…I haven’t personally dealt with Comcast…but I sure read an awful lot of bad things about them! I’m not sure there are ANY cable companies that don’t suck in the Customer Service arena. So far in my direct personal experience Cox, Verizon and TWC were all horrible. And you can find tons of horror stories about there about Comcast.

          Clearly this is an industry that doesn’t care about its customers.

          1. Clearly this is an industry that doesn’t care about its customers.
            It doesn’t have to. In most areas there is only one cable provider. Your choice is either deal with them or find a cable alternative which includes satellite TV or do without. Yes, there is over the air tv but that is severely limited and less than 7 percent of American do without cable or satellite.

            Fortunately, the popularity of broadband is allowing people to cut the cord. It is estimates that 5 million households who pay for tv (cable and satellite) will ditch and become internet only. If that trend continues then I expect cable to up customer service.

          2. No. That’s hardly a solution because we need to buy a broadband either from TWC or Comcast.

            I miss Frontiers DSL in my old place. Their customer service was really good. They gave me a couple of free wireless DSL modems, whose wireless part I’m still using with Comcast. Comcast sent me a cable modem to start charging a rental fee even though I told them specifically I would buy one myself and didn’t want theirs. DSL doesn’t provide enough speed to watch TV on Internet.

      1. Check into satellite Internet service. New providers are popping up into areas that never had it before. Exede recently came into my area and their prices are competitive with TWC, giving us more options.

        1. Not here yet. 🙁 But believe me, the moment I can jump off the TWC train, I will! I seriously dislike giving my money to a company with such bad service.

      2. The worst part is that less than 2 weeks after I cancelled the service, and before TWC sent me an appropriate bill (they never did, BTW) i had collections agents calling me asking for payment!!!!
        When I called the TWC billing department I told her that one of two things is going on; That TWC never wants me as a customer ever again, or that they know their service is so bad that I will never be their customer ever again.

  12. Same thing happened to me when I went from Sprint to T-Mobile. I read the rules — too late — and ate it. I agreed to them when I signed up for the service; silly me for not double checking and getting the right cancellation date. My problem, not theirs.

  13. Good to know, I always though AT&T contract service was post paid, not pre-paid. If I switch, I will make sure to do so at the end of the billing cycle. Although, looking at the bill I got in December, which was due and I paid a few days ago, it says its for 11/12/14-12/11/14. Maybe some contracts are post-paid and others are pre-paid?

    1. For mobile plans, You prepay for the basic service. The dates on the invoice are for any additional items over the basic monthly charges (i.e. exceeding minutes or data rate). It is on the bill, but it takes couple of glances for it to sink in. At least it did for me.

    2. Carriers used to assign pre-paid or post-paid to contracts based on the customer’s credit rating. I think pay-as-you-go put an end to that system. My guess is Mr. Reddy originated his contract when this payment structure was used, then renewed the contract at the two-year mark to get a low-cost new phone.

  14. Two FYIs:

    1. On an android tablet, I see 0 in ths replies, only the initial post by Chris at 8:46, in the forum.

    2. If you like AT&Ts coverage, but hate their customer service, you might want to consider Consumer Cellular, which has month to month plans, and mix and match levels of data, messaging and calls for a good price. And you can change srrvice levels whenever, even in the middle of the month, to avoid overage charges, then change them back next month.
    We’ve been with them for a year now, absolutely no complaints with their services, at a cost of about 1/3 of the previous cost of AT&T. Customer service seems to be staffed by people who actually listen and can solve problems– a huge change from AT&T.

  15. I have to say I did not have any problems with Sprint when I transferred my number from them. I was well out of my contractual obligation, but they still billed in advance as well. No problem getting a refund of the prepaid amount.

  16. Had the same thing happen to me. Cancelled my wife’s line Dec 4th.
    Bill received was for Nov. 24- Dec 24. Was told if I paid the whole amount due I would receive refund. If I didn’t pay it late fee would be assessed.

    I didn’t believe them about a refund, so I waited until next months bill, no credits or refund for partial month of service, but they did assess a late fee. Called in and CSR adjusted it for me manually, but it took about a half hour.

    ATT should not try to be charging for unused services. Pretty slimy… Especially if you want to keep customers. Was a customer with them for about 8 years. I switched to Republic wireless and am glad I did from price perspective.

  17. Next, Chris helps rental car customers that chose the refueling option get a partial refund because they didn’t use up the whole tankful.

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