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July 21, 2004

Multi-State Settlement to Benefit Cell Phone Users

Multi-State Settlement to Benefit Cell Phone Users

Verizon, Cingular and Sprint PCS agree to coverage maps
and return policies that help consumers.

Verizon Wireless, Cingular Wireless, and Sprint PCS have agreed with thirty-two states including Iowa to provide accurate coverage maps to consumers, give consumers at least two weeks to terminate service contracts without incurring any penalties, and make changes in the way they advertise and sell their services and coverage.

The companies, which are among the largest wireless providers in the U.S., agreed to:

Provide cell-phone coverage maps to consumers that are as accurate as possible with current technology. Maps previously provided by the carriers usually consisted of a map of the entire calling area colored in, in some cases the entire United States. Carriers referred to these maps as "rate maps," indicating where rates were available. However, coverage was not necessarily available in the entire calling area indicated for a variety of reasons, including lack of cell towers, lack of roaming agreements, lack of capacity to accommodate all calls during certain high peak times, and physical obstructions such as buildings, hills, and trees.

Give new customers a minimum of 14 days to try out the wireless service, to make sure service actually is available where they need and want it. During the return period, new customers will be permitted to terminate their service contracts for any reason without paying the early termination fee provided in the contract. The three carriers also agreed to provide a new policy for returns within three days of commencing new service; customers may terminate their service contracts for any reason within three days without paying the early termination fee, and they also will receive a refund of any activation fee paid when they signed up for the service.

Provide certain disclosures in the carriers' advertisements and through their retail, Internet, and telemarketing sales channels. The disclosures are designed to give consumers comprehensive information about the costs and limits of their wireless service.

The multi-state settlements, led by Tennessee and Illinois, resolve consumer protection investigations of the carriers focusing on alleged misleading advertisements and unclear disclosures relating to service agreement terms and wireless coverage areas.

The wireless carriers also agreed to pay a total of $5 million to the states to cover the costs of the multi-state inquiry and for general consumer education. Iowa's share of $375,000 will go toward public education relating to consumer fraud and for enforcement of the Iowa Consumer Fraud Act.

States entering into the settlement with the carriers are Alabama, Arkansas, Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming.

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