How America’s telecommunications giants profit from hidden recurring charges—and make customers jump through hoops to cancel them
By James L. Thompson | Federalist Press
For approximately ten years, I have been a customer of AT&T. During that time, I have purchased numerous telephones, upgraded devices, added family members to my account, and paid my monthly bills faithfully. Like millions of Americans, I assumed that the company providing my wireless service was operating in reasonably good faith, charging me for the services I needed and helping me make appropriate changes as my circumstances evolved.
Recently, I discovered just how expensive that assumption can become.
After taking a closer look at my monthly wireless bill, I identified approximately $71 in recurring charges associated with services my family no longer needed, or could reasonably do without. That amounts to $852 annually. Over six years, charges at that rate totals $5,112.
Five thousand dollars is a considerable amount of money to spend on services that provide little or no value to the customer. But what happened when I attempted to eliminate those charges was almost as disturbing as discovering them in the first place.
My experience raises an important question about the modern telecommunications industry: Why is it so easy to sign up for additional services, yet so extraordinarily difficult to stop paying for them?
The Extra Telephone Line That Wouldn’t Go Away
The story begins approximately eight years ago, when I was upgrading phones for members of my family. AT&T was offering one of its familiar promotions, the kind that promises attractive discounts on new devices if customers agree to certain conditions.
In my case, the new iPhone promotion involved adding another telephone line to our family account.
I was led to understand that the additional line was necessary to obtain the promotional pricing. At the time, the arrangement appeared to make financial sense, particularly because the line had a practical use for a while. But that need disappeared approximately six years ago.
The additional line, however, remained hidden in the background on my account, with no phone attached to it.
Month after month, year after year, AT&T continued billing me for it. There was no call from the company asking whether I still needed the service. No notification suggesting that I review the line. No warning that I was spending hundreds of dollars annually on a telephone number that had become unnecessary.
Of course, AT&T could reasonably argue that customers are responsible for reviewing their own bills. That is true. I bear some responsibility for allowing the charges to continue.
But there is another side to this relationship.
AT&T knows exactly how many lines a customer has, what those lines cost, and how much activity occurs on each one. The company has sophisticated systems capable of analyzing customer behavior, recommending upgrades, identifying opportunities to sell additional services, and delivering personalized promotions.
My September bill showed that the unnecessary line had consumed 0 gigabytes of data during the billing period, with no calls or text messages recorded. Yet I was still paying $41 every month for that line.
At its recent rate of $41.42 per month, the line alone represents nearly $500 annually. Six years at that rate would amount to almost $3,000. The exact historical total would depend on changes in pricing, but the larger point remains: a service that had outlived its usefulness continued generating revenue for AT&T year after year.
One wonders whether the company is equally enthusiastic about helping customers eliminate unnecessary services as it is about persuading them to purchase new ones. I’ll tell you about that in a moment.
The Little Extras That Add Up
The unnecessary telephone line was not the only surprise.
Another phone on our family account carried two additional monthly charges. One was $19 for AT&T’s Protect Advantage insurance program. The other was $10 for a service called Next Up Anytime, which provides certain early-upgrade benefits.
Together, those charges totaled $29 per month, or $348 annually.
These services are not inherently illegitimate. Insurance can be valuable, particularly for an expensive smartphone, and early-upgrade programs may appeal to customers who regularly purchase the latest devices.
But that is precisely the point: they are optional services, and their value depends entirely on whether the customer actually needs them.
For someone who keeps a phone for several years, a $10 monthly early-upgrade feature may be an unnecessary expense. Likewise, insurance coverage should be evaluated against the age of the device, its replacement cost, the applicable deductible, and the customer’s willingness to assume the risk of damage or loss. Any way you look at it, $684 for 3 years of insurance on a phone that sold for $1,000 is an extremely high rate.
What concerns me is how easily such charges become permanent fixtures on a monthly bill.
A customer agrees to a promotion, purchases a phone, or accepts a package of services. Months pass. Then years. The original circumstances change, but the recurring charges remain, hidden away in a several page monthly statement among a list of taxes and other charges.
And because each individual charge seems relatively modest, customers may never recognize the cumulative expense.
Ten dollars here. Nineteen dollars there. Another forty dollars for a line that nobody needs.
Suddenly, the customer is spending more than $800 annually on services that could be eliminated or at least reconsidered.
This is one of the great advantages of recurring billing—from the corporation’s perspective. Once a charge becomes part of the monthly routine, it may continue indefinitely unless the customer takes deliberate action to stop it.
Want to Cancel? Prepare to Sacrifice Your Afternoon
Having identified these expenses, I decided to call AT&T and eliminate them.
That should have been a relatively simple undertaking. After all, I wasn’t disputing my entire bill, demanding a refund, or threatening to terminate my relationship with the company. I merely wanted to remove three services that were no longer necessary.
Yesterday, I attempted to reach customer service. AT&T’s telephone system informed me that the wait could be hours.
I decided to try again today. The result was essentially the same. Once again, I was informed that reaching a representative could take hours. The system offered to arrange a callback approximately three hours later, so I accepted.
When the call finally arrived, I assumed that the purpose of scheduling a callback was to connect me promptly with an available representative.
Apparently not. I waited approximately ten more minutes before a young man finally answered.
I explained the situation, identified the charges I wanted removed, and asked him to help me reduce the bill. He confirmed that the services could be canceled. But there was a complication. Although he could address the optional charges, he told me he could not cancel the unnecessary telephone line. For that, I would have to speak with another department: Customer Loyalty.
Customer Loyalty. The name itself struck me as ironic. After ten years of faithfully paying AT&T, I had apparently earned the privilege of being transferred to another department, where I would wait more than 45 minutes for someone authorized to remove a telephone line from my account.
And so the music began. Horrible music.
Anyone who has endured an extended telephone hold knows the experience. The same unpleasant music repeats endlessly, occasionally interrupted by recorded assurances that your call is important.
Important enough, apparently, to keep you waiting for nearly an hour. But the inconvenience became considerably more serious when an unexpected family situation arose.
When Corporate Indifference Intrudes on Real Life
While I was waiting for AT&T’s Customer Loyalty department, my wife was dealing with a deeply upsetting situation involving a patient she cared for who was dying.
She needed me to come to her. When I arrived, she was crying.
Under ordinary circumstances, I would have given her my complete attention. I would have listened to her, comforted her, and helped her work through what had been an emotionally devastating experience.
Instead, I was still trapped in AT&T’s telephone queue, with their hellish music filling my head.
For the drive home, I had to divide my attention between my distressed wife and the seemingly endless hold music, knowing that disconnecting would mean abandoning the time I had already invested and beginning the entire process again.
I realize that AT&T did not cause my wife’s distress. Nor could the company have anticipated what was specifically happening in our family.
But that is precisely why customers’ time matters.
People have lives. They have jobs, children, aging parents, medical emergencies, family responsibilities, and countless other demands on their attention. Their schedules do not revolve around the convenience of a telecommunications company’s customer-service department.
A business that requires customers to spend hours navigating its bureaucracy is effectively transferring part of its operating burden onto those customers.
The company may save money by limiting staffing or centralizing cancellation authority. But the customer pays for those decisions in lost time, frustration, and sometimes far more important personal sacrifices.
Eventually, after more than 45 minutes on hold, a representative from Customer Loyalty answered. Even then, the cancellation required approximately another 15 minutes.
Think about that. After waiting for a callback, waiting again for the first representative, and then waiting nearly an hour for the proper department, I still needed another quarter-hour to eliminate a telephone line that was no longer being used.
This was not a complicated technical problem. It was a request to stop providing—and charging for—a service . . . that I hadn’t utilized for six years.
Why should that require such an ordeal?
The Difference Between Buying and Canceling
I cannot help wondering what would have happened if I had called AT&T to purchase another telephone or add another line.
My experience over the years has been that companies are remarkably accommodating when customers want to spend more money. Zip— to the the front of the line!
Sales departments are enthusiastic. Promotions are plentiful. Representatives are eager to explain the advantages of buying and upgrading. Customers are encouraged to act quickly before an attractive offer expires.
But when a customer wants to spend less money, the experience can be entirely different.
Suddenly, the process becomes complicated. Additional departments must become involved. Special representatives must authorize changes. Customers are transferred, placed on hold, and subjected to extended waiting periods.
The contrast raises a legitimate question: Are telecommunications companies designing their customer-service systems primarily around customer convenience, or around protecting recurring revenue?
AT&T’s own cancellation instructions provide an interesting clue about how the company structures the process.
Its official support page directs customers seeking to remove a wireless line to contact the company through chat, when available, or by telephone. It specifically encourages customers to speak with its loyalty representatives. Online cancellation is described as available only in certain circumstances for customers in Illinois, Massachusetts, and New York.
In other words, for many customers, eliminating a wireless line is not presented as a simple account-management transaction that can be completed independently with a few clicks. It requires interacting with AT&T’s customer-service system.
The company may have legitimate reasons for confirming identities, explaining financial obligations, and ensuring that customers understand the consequences of canceling service. But none of those considerations should require hours of waiting.
There is a fundamental difference between protecting customers from accidental cancellation and making cancellation unnecessarily burdensome.
The Economics of Customer Inertia
There is a well-established behavioral phenomenon that businesses understand extremely well: people tend to continue existing arrangements rather than expend time and effort changing them.
Economists and psychologists often describe this as the status quo bias. It helps explain why customers continue paying for subscriptions they rarely use, memberships they have forgotten, and optional services they no longer value.
The financial incentives for businesses are obvious. Imagine a company with one million customers who each pay an unnecessary $10 monthly charge. That represents $10 million in monthly revenue, or $120 million annually.
If customers discover the charge and cancel it, that revenue disappears. If they never examine their bills, or decide that canceling is too much trouble, the money keeps flowing.
This does not prove that any particular company intentionally creates obstacles to cancellation. But it demonstrates why businesses may have little financial incentive to make the elimination of recurring charges effortless.
And that is the problem. The interests of the customer and the corporation can diverge sharply. The customer wants to pay only for services that provide value. The corporation benefits when recurring revenue continues.
A healthy competitive marketplace should encourage companies to resolve that conflict by treating customers fairly and earning their continued business. Instead, some customer-service practices appear to rely on inertia, complexity, and frustration.
The customer who gives up after 45 minutes on hold may continue paying for another month. Perhaps another year. And every month of delay, the charges continue.
What About the Thousands Already Paid?
My immediate objective was to stop the unnecessary charges going forward.
But that leaves another question: What about the thousands of dollars I have already paid?
To be clear, I am not claiming that every historical charge was unauthorized. The extra telephone line was originally added as part of a transaction I accepted, and the optional services appeared on my bills.
The issue is whether a company that actively encourages customers to add services should bear some responsibility for helping them recognize when those services have become unnecessary.
AT&T had the ability to see that one of my lines was unused, for several years. It had years of billing history. It had every opportunity to encourage a review of my account. Yet the charges continued until I took the initiative to investigate them.
Wouldn’t a company genuinely committed to customer loyalty occasionally review an account and say, “You’ve been paying for this extra line for years, but it appears you’re hardly using it. Would you like us to help determine whether you still need it?”
Such a conversation might cost AT&T a few hundred dollars in annual revenue. But it would earn something that companies claim to value enormously: trust.
Instead, customers may discover years later that they have spent thousands of dollars unnecessarily. And when they call to correct the situation, they may find themselves listening to hold music for the better part of an afternoon.
A Message to AT&T—and Every Company That Depends on Recurring Revenue
I am not suggesting that AT&T is unique. Similar frustrations can arise with cable companies, internet providers, streaming services, insurance companies, financial institutions, and businesses operating on subscription models. I also discovered that Paramount Plus and another online streaming company were charging me for services I never ordered, and never used.
But AT&T is one of the companies with which I have had this experience, and I believe it deserves public scrutiny. The company should be able to answer several straightforward questions.
Why can’t an authorized customer remove an unused telephone line as easily as adding one? Why must a routine cancellation be transferred to a specialized loyalty department? Why should a customer who has already waited hours for a callback face another extended hold? And why aren’t customers periodically encouraged to review longstanding recurring charges, particularly on accounts with multiple lines and optional services?
Most importantly, why should customers have to fight so hard to stop spending money?
I am not asking AT&T to provide free service. I am not asking the company to forgive legitimate debts or disregard the terms of an agreement.
I am asking it to respect the time and money of the people who have supported its business for years.
A company that earns billions of dollars in revenue should be capable of providing a reasonable process for canceling a $41 monthly telephone line.
And a customer who has remained loyal for a decade should not have to spend hours proving that loyalty before being permitted to stop paying for something he no longer needs.
The Lesson for Consumers
My experience should serve as a warning to anyone who receives a recurring monthly bill. Examine it carefully. Not just the total, but every individual charge.
Look for telephone lines that are no longer used, insurance policies that may no longer make economic sense, early-upgrade programs that provide little value, subscriptions that have outlived their usefulness, and promotional arrangements that have quietly become permanent expenses.
Do not assume that a company will notify you when a service is no longer necessary. Do not assume that a promotion that made sense five years ago still makes sense today. And do not assume that customer loyalty will automatically be rewarded with the lowest available price.
If a company makes cancellation unnecessarily difficult, document the experience. Keep copies of your bills, record the dates and approximate lengths of calls, and request written confirmation of any changes.
Consumers who believe they have encountered improper telecommunications billing practices can also submit complaints through the Federal Communications Commission.
But ultimately, this issue is larger than any individual complaint. It concerns the kind of relationship American businesses should have with their customers.
For generations, successful companies understood that long-term relationships depended on providing value, keeping promises, and treating customers with respect.
Today, too many corporate systems seem designed around extracting the maximum possible recurring revenue while minimizing the expense of serving the people who provide it.
That may produce impressive financial results in the short term. But it is a poor substitute for genuine customer loyalty.
After ten years as an AT&T customer, I have learned an expensive lesson: a company may be very good at keeping your business without being particularly good at keeping your trust.
And when it takes hours simply to stop paying for something you don’t use or need, perhaps the company ought to reconsider what the word loyalty really means.
Disney Corp, you’re next.
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