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Cell Phone Upgrade Fees

This article was written by in Consumer. 9 comments.

Think you’re getting a deal when you upgrade your cell phone? There are hidden fees you may be paying without knowing it. The Red Tape Chronicles did some investigating and discovered cell phone retail salespeople mocking their customers, describing how they mislead the unsuspecting:

* “If someone asks me why upgrade fees are charged, I simply tell them that it is so I can get a paycheck. Most people just laugh and end up signing up.”
* “(I) wait until it pops up on their bill. Never when selling the phone.”

The biggest offender according to the article is Cingular, while my phone company, Verizon Wireless, seems to be absolved. Verizon has a long-standing “New Every Two” promotion in which customers on two-year contracts are automatically given a $100 discount on a phone every two years. If the chosen phone is less than $100, it is free. It certainly helps with keeping customers loyal year after year, but we must be paying for it somewhere else.

Updated June 17, 2014 and originally published August 7, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 9 comments… read them below or add one }

avatar mapgirl

Blah. My phone died this weekend. Let’s see what Verizon charges me today.

Nice template change. I like the lighter colors, but you can tell I’m already partial to pastels.

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avatar Jawsche

Upgrade fees are actually justified. All companies do them, and it’s to go towards discounts in other areas and support other free services. At least, that’s how it is with the company I work for. We offer lots of different free services from the phones and the website, and the only way we can keep these services free and easy is to charge upgrade fees. It all makes sense when you hear the business explanation from someone who knows what they’re talking about. It’s easy to think it’s bogus when you have no idea how cell phone services work.

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avatar cygnus

Nice try. In what world does recuperating part of the discount you supposedly just received make any sense? If the business is being honest, it would just charge what they want for the phone instead of selling a consumer the phone and then tacking another charge on the bill.

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avatar Scooter

justified? HOW!? $20 for unlimited texts is 100% profit. it costs them nothing to send a text…..get with it, the upgrade fee is outrageous and uncalled for…”to cover the cost of the phone” … they already make $240 off unlimited text users….so upgrade fee can go away, on all carriers

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avatar Justin M

I never had a problem with verizon wireless. i have had them for a solid 4 yrs now. Changed phones many of times. even got out of some of the $35 connection feels when registering a new handset. I have a family plan with 4 lines, and every 18months i get the free phone or early upgrade. NO MONEY out of my pocket, nothing changed on my bill either.
I also just go directly through the VZW DIRECT store, or call customer service. Sorry everyone is having a problem. I guess i just got lucky so far.

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avatar technokat


Please tell me HOW a company that charges me $200 for a phone has to charge me to use it? Shouldn’t that be included in the fee when I buy the phone in the first place? Had I know that the charge for using this phone would be $218, I would probably have gone much cheaper. The salesperson at the AT&T store never mentioned this fee ONCE. This is misleading. I refused to pay it the first time I saw it conveniently “show up” on my bill. I tried to call AT&T but it was after business hours. So surely they aren’t using these fees to pay for round-the-clock customer service.

When the fee showed up on my second bill, I called AT&T during hours and the customer service rep was happy to waive the fee. If this fee is necessary, why was it waived so quickly and easily?

I don’t enjoy free ANYTHING with my phone service, so I cannot see how charging me this hidden fee AFTER the fact is justifiable.

I think the cell phone companies sell us garbage equipment at prices that create enormous profits to begin with–now they want to nickel and dime us claiming they have to spend time and money to “switch” lines to better phones? Sorry…I don’t buy it. Please outline the reasoning in detail so that you can actually back your claim that this fee is necessary.

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avatar feastie

I use Verizon and have since I got my very first phone back in 2001. That’s eleven years for those keeping count. What has my loyalty gotten me so far? As of about three months ago, ten bucks extra on my bill in some new fees or other. I’ve checked the texting, everyone is below the limit. Checked data, also below the limit, because I am the only one on my plan that has it and I have the unlimited service. Due for my upgrade as of today. Logged in to view my options. There’s a brand spankin’ new fee, an upgrade fee. Excuse me? How have I managed to upgrade my phones for the past eleven years without this fee! Even as recently as February 2012! Suddenly, Verizon is in danger of losing profits at 30 bucks a whack? Not to mention, should I choose to upgrade, my unlimited data package, which I am currently paying 29.99 for, becomes limited at 2GB per month at one cent more. How does this make any sense? Oh, and I get nothing for free. Nada. So don’t try to whitewash me and tell me that I’m getting all these free services that my nifty new upgrade fee covers. That makes them not free, doesn’t it?

I for one am fed up. The cost of cell phones has out paced the rise of gasoline, even. It is utterly and astoundingly exhorbitant, yet we all just blithely accept it. Well, most of us. There may well be changes in my life very soon.

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avatar Scooter

this is crap, there should be NO upgrade fee to any phone…they make 100% profit on any and all text messaging packages…so if one person pays $20 a month for unlimited, which most teens and young adults do…thats $240 a year, multiply that by teh millions upon millions who use $20 a month….there is NO NEED for an upgrade fee…they are already making 20$ 100% profit off of the millions who use unlimited text messages…it costs them not once cent to send a text

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avatar GreenMtnGal

Son’s upgrade with Verizon in January was $20.00. Today, my upgrade with Verizon was $40.00. I was so shocked I almost threw down the pen as I started to sign for the extended contract. To make it worse, I was told if I didn’t buy the insurance plan, I had to cover the full cost of the phone if I lost or damaged it in the first 6 months! This is worse than the fees we’re paying with the airlines.

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