Stop Being Fleeced By Telephone Leasing Fees

I am compelled to write about this topic as a result of an experience with an elderly client of mine.  She has spent thousands of dollars already to lease her telephone because it was provided by to her by the phone company many years ago.  From what I was able to determine through my research, the leasing of telephones started decades ago when this type of arrangement was common.  She has been paying the charges on her monthly bill ever since. Often the payments go on until a senior's children notice the "leasing equipment" fee and question it; but if there is no one looking over the bill, it may never be questioned at all.

I have no doubt that unsuspecting telephone customers have spent more than $10,000 to lease phones they could have purchased for around $20.  This is based on a scale of lease payments, which is paid on a monthly basis since the 1970’s.

In 2002, AT&T and Lucent Technologies agreed to a $350-million class-action settlement for leasing telephones to 29 million people for far more than it would have cost to buy the same equipment. The phone companies never admitted any wrongdoing.  Despite this negative publicity, AT&T still had 580,000 phone-leasing customers as of July 1, 2007.

Phone leasing was commonplace until the break up of AT&T more than 20 years ago. Since the break up, consumers have had a staggering array of choices for local and long-distance phone service, which includes buying their own telephones. Some of the original phone renters continued leasing and all of the 580,000 customers are still paying.  Monthly lease rates vary depending on the type of equipment you have. 

According to Alcatel Lucent (which operates AT&T’s Consumer Lease Services Business), the spectrum is surprisingly large.  The cheapest lease is a basic phone, which costs $4.45 a month and a full featured two line cordless phone costs a whopping $19.95 a month.  Furthermore “The most popular leased telephones are the Signature Series products, which "are much more robust than the average telephone, are available in a wide selection of colors and have special features, such as a real bell ringer.”  So it is obvious that most are paying more that the basic phone leasing charge.  And while it is true that the company offers an “unconditional product replacement", this is a very steep price to pay.  Given the plethora of choices these days, I doubt that many people are actually taking advantage of this offer. 

This is a huge cash cow for the phone companies, so there is no way they are going to stop this practice.  It is found money to them and it is not governed under any consumer protection laws.  The only requirement is that the fee be clearly stated on the bill, which it was for my client.