How to Dump a Cellphone Contract

Cellphone carriers don't seem to take chances with customer loyalty. Consumers who end a contract early typically incur a penalty of $150 or more. Fortunately, Web-based services now make it easier to unload a cellphone contract without taking a hit.

Termination fees are a contentious issue, particularly for cellphone users who want to leave their carriers for lower-price plans or better coverage. Consumer groups have filed lawsuits challenging the fees, while legislators in many states are considering measures to protect customers. A proposed New Jersey bill, for example, would allow consumers to cancel their contracts without penalty within the first 30 days, or if rates increase.

But some consumers are now avoiding early-termination fees by relying on a common loophole in many cellphone contracts that allows transferring the remaining term to a third party whom the carrier approves through a credit check. To test the feasibility of finding takers for a cellphone contract, we hawked our phone and remaining Verizon Wireless contract term (11 months) on several Web sites, including two that specifically help users sell their contracts, CellTradeUSA.com and Cellswapper.com. Our offer included a free used Samsung flip phone with features such as a camera and music player. (We paid $50 for the device as part of a two-year contract.) We threw in two chargers (worth $60) and offered a free month of service ($39.99). Verizon's early termination fee is $175.

Finding volunteers to assume our contract was surprisingly easy -- we were out of it within five days. Advertising our phone on multiple sites certainly helped to maximize our chances. But we did have to sweeten the deal -- and offer cash -- in some cases to drum up interest. There was a significant downside, too: We couldn't keep our phone number, since it transferred with the contract. Also, the deal required several calls to our provider. Our recipient cooperated with Verizon's process for assuming the contract. But the situation could have dragged on if he had stalled. Also, the transfer process can vary among carriers, creating additional steps. We delivered the phone to our recipient in the next town, saving shipping expenses.

Auctioning our cellphone package for a penny on eBay seemed like a good idea. But the Web site's system prevented us from listing a used cellphone with a contract. We learned that only authorized resellers of cellphone services can sell contracts on eBay, even though transferring our existing contract to a winning bidder would be legal.

We posted our offer on Craigslist (www.craigslist.org), where other users were trying to dump their contracts. A person responded on the same day, but then didn't reply to our messages. The Craigslist posting is still online, and just one other person contacted us -- four weeks later.

Our listing was free on CellTradeUSA.com. We created a profile that included a photo of our phone and calling-plan details. We didn't hear from anyone for three days, so we upped the ante from a free month of service to $50 cash. Six days later, we learned someone was interested. We paid a one-time $19.99 fee to access responses to our offer -- a small price, we thought, when compared with the $175 termination fee. Users who advertise shorter contracts -- ranging from nine to 12 months -- are generally more successful at finding a match, according to Eric Wurtenberg, chief executive of CellTradeUSA.

Free listings are also available at Cellswapper.com, but an $18.95 service fee applies to proceed with a transfer to a Web site user who is interested in the plan. We upgraded our listing to the Power Poster feature after several days of inactivity. It cost $14.95, but heightened our visibility as a featured placement on the plans page. (Upgrading also eliminated the $18.95 service fee to access messages.) We increased our generosity to $50 cash again, instead of the month of service. A buyer contacted us after eight days, but wanted us to swap phones and plans with him. A second buyer contacted us, but we couldn't access her message using our Mac and Safari browser. CellSwapper.com Chief Executive Adam Korbl said the company is experiencing some difficulties with Mac users and is working toward a resolution.

Our phone and contract were gone, however, by the time we heard from anyone through CellTradeUSA.com and CellSwapper.com. We met our match -- and two other possibilities -- almost instantly through the Freecycle Network (www.freecycle.org), an organization of thousands of local groups whose members exchange items at no cost in an effort to reduce waste. We were concerned that our offer may bend the organization's rules, which prohibit selling items. But we reasoned that the phone, chargers, and month of service were free, and that members could benefit from a short-term cellphone contract. Our local moderator first said that we were ultimately asking for money. We disagreed, noting the contract would exist between the recipient and the cellphone company, not us. She allowed us to proceed.

A spokeswoman for the Freecycle Network says that members frequently give away cellphones, but ours was the first situation she knew of involving a contract. Freecycle is mainly concerned that items be free and legal, she said, but local moderators interpret the national policies to best fit their group.

We called Verizon, after striking our deal, to conclude the transfer. Our recipient then called to switch the account and authorize a credit check. We're ahead by $135 (after paying one month of service). He's content with a cool phone that didn't cost a dime. What a deal.