CONSUMER WATCH Signing a contract Read closely

By Denise Washington,2014-03-26 10:59
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CONSUMER WATCH Signing a contract Read closely

标题: CONSUMER WATCH: Signing a contract? Read closely

    作者: Ellison, David, Houston Chronicle (TX), Aug 16, 2008

    数据库: Newspaper Source

    CONSUMER WATCH: Signing a contract? Read closely

    David Ellison

    Aug. 16--Jeffery Cardenas thought he had signed a 12-month residential electricity contract online for 12.5 cents per kilowatt hour, but his first bill put the total cost in a different light.

    The YEP Energy bill was much higher than the kilowatt-hour price because of the additional charges for the transmission distribution service provider, in this case CenterPoint Energy and other taxes and fees. After being upset over what he called a bait-and-switch tactic, Cardenas said he called the state's Public Utility Commission to complain. "So what the PUC says is well, 'If that's what the contract says, then you're kind of stuck with it.' But by that time I've already signed up and it's too late to change. And she says you have to ask somebody and be very specific by saying, 'Does that include the distribution charges or whatever.' "

    The Friendswood engineer, who ordered the service for the first time on PUC's, got a little lesson on the fine print in contracts. And although he admits it's partially his fault, he still wants to tell others about the necessity of reading the paperwork thoroughly on all contracts.

And he's not the only one.

    Consumer advocates, experts and even businesses stress the importance of reading the contracts, regardless of the small print and legal terms. "If we are talking about a contract that you don't understand, you don't have to sign it that minute," said Betsy Gelb, a marketing professor at the Bauer College of Business at the University of Houston. "You can take it and show it to anybody you want, including a lawyer."

    Some of the things that anger consumers with the normal service contracts are the early-termination fees, annual service contracts that roll over into higher rate if you don't renew before the termination date and "negative option" agreements that are common among book clubs. Dan Parsons, president of the Better Business Bureau of Greater Houston and South Texas, said his agency receives several contract complaints against business such as cell phone companies and electric providers. "With any contract," Parsons said, "watch for what they call a recurring contract, open-ended, revolving -- anything that doesn't have a finite date. The way to think about this is when you finance your car, you know it's going to be three, four or five years. What you have to do on some of these smaller purchases is ask that same question."

    Jeff James, YEP's vice president of marketing, agrees on the importance of reviewing contracts and terms of agreements.

    "Most customers don't really bother about that contract until they feel a

    pain or until they look at the monthly bill and go, 'Whoa! What in the heck just happened.' And that's too late."

    James said electric customers often are confused because there is a rate charged by the electric providers and an additional amount charged by the transmission distribution service providers, the companies that own the electrical wires, poles and meters on the houses and businesses. The extra costs also include regulatory charges and taxes. Those charges make up about 20 to 30 percent of your total bill.

    The information about the charges and fees are available on what's called the electricity facts label, which the providers are required to give to customers. It's also available on

    "Think of it like your nutritional label on a box of Cheez-It," James said. "This tells you everything that's in the electricity that you are buying, the terms and conditions of a specific rate plan, and it tells you the specific electricity rate plan."

    Another sore contract topic is early-cancellation fees, which customers are asked to pay if they cancel a service before the end of the terms. "In a strange way, a cancellation fee is like a restocking charge," Gelb said. "We went through all the trouble of doing something in the belief that we were selling this to you and we want to be reimbursed for that cost."

    James said electric companies require such fees because they have to be

    reimbursed for the electricity they purchased in advance for the customers.

    Cardenas said he understands the reason for cancellation fees, but he feels they should be much lower.

    Ray Fohr, an AT&T spokesman, said in an e-mail that wireless customers who are in a one- or two-year service agreement are subjected to an early termination fee because the customer received a significant discount for the device.

    On May 25, the company implemented a $175 termination fee that is prorated over the contract's life, Fohr said. He said it is lowered $5 a month after the initial 30-day service cancellation period, in which no fee applies.

    All charged up over a consumer problem? Send an e-mail to

    To see more of the Houston Chronicle, or to subscribe to the newspaper, go to Copyright (c) 2008, Houston Chronicle Distributed by McClatchy-Tribune Information Services. For reprints, email, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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