Far EasTone Telecommunications (FET) and Taiwan Star might have overcharged subscribers who bought telecom services and high-end smartphones due to early termination of telecom contracts, the Consumers’ Foundation has said.
The foundation from July 10 to 21 studied plans offered by the nation’s five telecoms coupling telecom services with a purchase of an iPhone XS Max 256GB smartphone, for which subscribers are required to sign a 30-month contract and pay NT$999 per month for unlimited data.
In return, subscribers receive discounts on the telecom service fee and the smartphone’s price, it said.
FET clients who want to end their contract after 15 months are required to pay a penalty fee of NT$9,750, it said.
Penalty fees implemented by Taiwan Star, Taiwan Mobile, Asia-Pacific Telecom and Chunghwa Telecom are NT$8,875, NT$7,125, NT$7,000 and NT$4,800, respectively, it added.
FET and Taiwan Star charge higher penalty fees than their competitors, the foundation said, adding that FET also contravened the regulations governing broadband businesses by charging consumers for the remaining months on the contract, instead of days.
FET could face a fine of NT$100,000 to NT$500,000 according to the Telecommunications Act (電信法), the foundation said, adding that the National Communications Commission (NCC) should look into the services offered by the two telecoms.
Japan has capped the penalty fee to about NT$280 if a contract does not include the purchase of a smartphone and NT$5,700 if it does, and Taiwan should consider following suit, the foundation said.
NCC Platform and Business Department Acting Director Tsai Kuo-tung (蔡國棟) said the commission is looking into the allegations.
Penalty fees for early termination should be calculated by multiplying the number of days left on the contract by the daily penalty fee, Tsai said, adding that the fundamental principle remains unchanged.
Consumers in general subscribe to a telecom service from a carrier and do not have to purchase smartphones from it, although they are likely to purchase devices that way, he said.
Telecoms offer discounts on high-priced smartphones on the condition that consumers sign a contract and agree to pay heavier penalty fees for early termination, Tsai said.
Asked if the study’s findings are valid, as the foundation only examined one service plan coupled with a specific smartphone, Tsai said that telecoms tend to have different target users in mind when they launch promotions for different smartphones.
Telecoms tend to offer larger discounts for a smartphone if it helps them reach their target users and smaller discounts for smartphones that are not their focus products, he said.
It would be better to examine penalty fees for other service plans and compare the telecoms’ policies, he added.
FET said it charges penalty fees based on the number of days left on a contract instead of months, adding that the contract clearly states the terms governing penalty fees.
In the case provided by the foundation, a consumer would have to pay NT$7,875, not NT$9,750, it added.
Taiwan Star said its discounts for service plans combining telecom services with mobile phones are better than those of other telecoms, adding that it set its penalty after calculating operational risks and other factors.
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