THREE MONTHS AGO
, 29-year-old Mark Girgis decided he'd had enough of T-Mobile's dropped calls on his frequent business trips to upstate New York, Vermont and southern New Jersey. The problem: Dropping his contract seven months early would have cost him a $200 early-termination fee.
So when a co-worker told him about Celltradeusa.com, a web site that would help him find someone to take over his T-Mobile contract for a $19.99 registration fee, Girgis decided to give it a try. It paid off immediately. "I got emails the same day from people who wanted my phone," Girgis says. Within days, a buyer from Delaware got approved by T-Mobile to take over the contract, the transfer was completed and Girgis promptly switched to another carrier.
Many folks don't realize that they can drop their cell phone contract without paying a termination fee, which typically runs as much as $150 to $200 per line. All they have to do is find someone willing to take the contract over for its remaining term.
Granted, this may not be easy: Beyond your family and friends who probably have contracts of their own to gripe about who's there to ask? That's why a year ago Eric Wurtenberg and his brother launched Celltradeusa.com, which connects consumers who want to get rid of their contract with those looking to assume one. This way, sellers can drop their cellphone carriers for a fraction of the penalty fee, while buyers can get a contract with a much shorter term than the now-standard 24 months, pay no activation fees and, in most cases, receive a free cell phone from the seller.
The service is free for the buyers, who can search ads posted by sellers based on criteria such as cellular company, contract length, monthly price or type of phone offered. The $19.99 fee that sellers pay is due only after they start receiving emails from interested buyers and in the case they want to access the sender's contact information. Since it launched a year ago, about 75,000 users a month have visited the site, which typically sports at least 1,000 active "for sale" ads, according to Wurtenberg. (A recent search yielded 1,179 listings.)
But while it offers advantages for both buyers and sellers, the service also comes with a catch: While it can help you find an interested buyer for your contract, it doesn't help with the actual transfer. "We can't get involved," says Wurtenberg. "We're a matchmaking service. Like eBay, we're connecting people."
Spokespeople for Verizon Wireless, Cingular and Sprint PCS/ Nextel confirmed that the companies do contract transfers, but said they don't endorse the web sites that facilitate it. "We caution our customers against doing business online, with companies they don't know," says Tom Pica, a spokesman for Verizon Wireless. (By press time, T-Mobile and Alltel had not returned our calls seeking comment.)
Still think the risks are worth it? Here's how to drop your carrier safely.
Know the rules
Before you even sign up on Celltradeusa.com, call your cellphone carrier and ask about any specific requirements they may have in order to transfer your contract. All big carriers currently allow transfers, according to Celltradeusa's Wurtenberg, but how they do it varies. T-Mobile allows you to complete the transfer over the phone, according to Wurtenberg, while Sprint PCS typically requires an in-store signature. This may limit your pool of prospective buyers to folks who live nearby.
All carriers, meanwhile, will do a credit check on the person willing to assume your contract. If the buyer doesn't measure up to the carrier's requirements, the deal will fall through. Celltradeusa.com, on its part, can't do anything to screen potential buyers except verifying their email addresses.
Keep a paper trail
The good news is that when the carrier transfers a contract, the original holder is typically not liable if the person who assumes it fails to pay subsequent bills. By press time, SmartMoney.com was able to confirm that this is the case with Verizon Wireless, Cingular and Sprint PCS/Nextel. Needless to say, consumers should confirm that again with their carrier before they complete the transfer process.
Even so, some extra protection won't hurt. Ask the carrier to send you an email or letter confirming that your contract has been transferred to another person and keep that in your records, recommends Linda Sherry, spokeswoman for Consumer Action, a consumer-advocacy organization in San Francisco. This way, if the cellphone company or a collections agency tries to come after you for any bills the new user hasn't paid, you have proof that you are no longer liable.
How do you find a buyer fast? Offer incentives, says Wurtenberg. A free phone and accessories will go a long way to get you interested buyers, especially if it's a trendy Motorola RAZR or Treo smartphone. "If you're offering a high-end phone you may get out in a couple of days," says Wurtenberg. Logically, lower monthly payments and fewer remaining months are likely to get more interest than ads with higher payments and longer contracts.
Keep your number
Just because you're leaving your cellphone carrier mid-contract doesn't mean you have to give up your phone number. In fact, you re entitled by law to keep it thanks to a Federal Communications Committee mandate on number portability, according to Wurtenberg. Here s what you have to do: Once you have someone lined up to take over your old contract, go to the company you plan to switch to and ask them to port your number. As with all number portability cases, your new carrier will call your old one and your old contract will be automatically canceled. At this point, you need to call your old carrier and tell them you have someone lined up to take over the contract. The old carrier will complete the transfer and you won t have to pay a termination fee.