Fighting Unfair Fees – New Bill Seeks to End ‘Corporate Greed’

As an executor managing an estate, one responsibility is closing the deceased’s accounts and paying their final bills.

When Aileen Gunther, a New York lawmaker, was paying her late mother’s final cable bill last summer she was shocked to see how high the bill was. Further review showed her mother had been charged an early termination fee for breaking her contract because she died.

Gunther, a Democrat from Sullivan County, is now proposing to institute a ban in New York on the practice of charging a fee when an account is cancelled early due to the subscriber’s death. Gunther’s Bill A8630 was submitted to the New York State Assembly in December and is awaiting action.

According to the bill, “providers of telephone, cellular telephone, television, Internet, energy or water services” would be prohibited from “imposing a termination or early cancellation fee if a customer has deceased before the end of such contract.”

“Many companies use early termination fees to ensure a customer continues use of a service through the contract length,” Gunther writes in the bill. “There have been instances where these companies have charged early termination fees to accounts cancelled prior to the expiration of the contract due to the customer’s death. This legislation would prohibit this unseemly demonstration of corporate greed.”

Violations of the ban would be punishable by a civil penalty of up to $1,000 if the bill is passed. The bill is currently before the Assembly’s Consumer Affairs and Protection committee.

While laws such as the one proposed by Gunther would spare consumers from being charged these fees in the first place, it is important to know that not all service providers charge an early termination fee when someone dies. And in some cases where a cancellation fee is charged to a deceased person’s account, it is done in error and can be removed.

So what are you to do as executor?

  1.  Review all bills closely. As executor it is your job to make sure the deceased’s assets are not wasted and you can be held legally responsible for poor money management. It can be time consuming to carefully review all the bills and check each charge, but it is an important part of your work as executor. Be sure to not just look at the bottom line cost, check individual charges and make sure charges stopped on the day the service cancellation was requested.
  2. Question any termination fees. If you notice termination fees and any other unusual charges, call the company that sent the bill. Perhaps when they received a cancellation request they did not know it was due to death or they simply made a mistake. Or they might need documentation, such as a death certificate, to waive the charge. Before assuming you must pay the fee, check to see if it can be waived. Yes, it’s a hassle to have to call customer service, but it can be the fastest way to resolve the matter. If the company says the fee is valid even in cases of death, you might want to check with your local elected official to see if there are any laws against these fees in your state.
  3. Document and follow-up. If you speak to someone in customer service at a company make sure to get their name and write down what was discussed for your records. If a credit is promised, you’ll want to make sure it is received. Because that can take a while – perhaps even a month or more – it is wise to make a note to check it later. If no credit can be applied and the early termination fee will stand, it is also wise to document what you did to try to get the money returned, who you spoke to, and the company’s policy. That way if later the probate court or a beneficiary questions the charge, you can share these notes and not have to rely on memory alone.

While laws like Gunther’s, if passed, will further protect the assets of a deceased person’s estate, there are often still ways to avoid paying early termination fees when a contract is broken due to death. As executor, it is important to question these charges and make sure you are protecting the assets of the estate. While it can be time consuming to do so, fees can be costly and paying them blindly can lead to accusations of financial carelessness, unhappy beneficiaries, and a shortage of cash to handle other estate matters.