FTC and FCC Alert Consumers Who May be Unwittingly Leasing Phones

In 1984, before the break up of Ma Bell, about 55 million consumers leased their telephones. Today, the Federal Trade Commission and the Federal Communications Commission launched a campaign to alert consumers who may have continued their leases unwittingly that those phones could be costing them hundreds or thousands of dollars more than if they purchased their phones outright. The agencies said that more than 5 million customers have continued to lease their phones since 1984. This amounts to more than $4 per month for the standard rotary dial model, about $6 per month for the standard push button model, and more for other models.

"Most phones pay for themselves in four to six months, and they often come with one- or two-year warranties from the manufacturer," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Our greatest concern is consumers who may be leasing their phones without knowing it."

"For over a decade, consumers have had their choice of phones in all shapes and colors," said Mary Beth Richards, Deputy Chief of the FCC's Common Carrier Bureau. "And these choices also mean the opportunity for real savings. At the same time, consumers need information in order to make the best choices. As competition enters more and more communications markets, consumers will have an increasing need for this information and we are speaking out today to help meet that need."

The agencies suggested that consumers might want to check their phone bills. If the bill has a charge for"leased equipment," that means the consumer is leasing a phone. Some telephone lease companies send consumers separate bills for the lease charges, and others include the charges as part of their monthly phone bill, they said.

Phone leases still may be appropriate for some consumers with short-term needs and there is the convenience of changing phones and having repair service included in the overall charge, the agencies added. But this convenience comes at a cost, and a chart included in the"Focus on Phone Leasing" brochure issued by the agencies as part of their awareness campaign shows that leasing a standard push button phone for a year can cost consumers almost three times as much as buying a similar phone.

Copies of "Focus on Phone Leasing" are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. The brochure also is available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov and on the FCC's http://www.fcc.gov.