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Every once in a while you hear stories about people getting hit with ridiculously high charges, such as for cell phone or cloud computing, e.g.:

  • In the cell phone case, this can happen when (for example) a customer roams internationally and doesn't realize that they had agreed to a contract with absurd prices (like $15/MB).

  • In the cloud computing case, this can happen when (for example) a customer doesn't properly shut down a machine.

Sometimes, this is a result of the vendor making it difficult to keep the bill in check, such as by designing their website in such a way that you need to check a non-obvious page for billing.

Other times, this is just a result of the customer simply being caught off-guard.

Companies often forgive these bills for (what I assume are usually) PR- or cost-related reasons, but I've been wondering:

What legal basis (if any) might the billed party have for challenging such cases?

For the sake of this question, please assume:

  • The bill is correct per the contract.

  • The charges were not caused by malicious entities (e.g., DDoS attacks, hackers, etc.) or force-majeure events.

  • A reasonable person would agree that such a customer would have taken steps to avoid such charges if they had realized the consequences beforehand.

  • The vendor can reasonably forgive most of bill if they wish to. (e.g., perhaps their actual incurred costs were much lower.)

  • The question is not related to healthcare.

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    – Dale M
    Apr 23 at 13:48

4 Answers 4

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What legal basis (if any) might the billed party have for challenging such cases?

None. Under the conditions stated, the customer owes the full amount of the bill.

Companies often forgive these bills for (what I assume are usually) PR- or cost-related reasons,

Lurking in the background is bankruptcy. You can't collect $1,000,000 from someone with only $100 of assets that are exempt from creditors and a minimum wage job.

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  • 3
    It's not quite as simple. As almost always in the U.S., a mix of federal and state law governs consumer protection. Pennsylvania, for example, has an Unfair Trade Practices and Consumer Protection Law whose catch-all clause (§201-2 (4) xxi) outlaws "Engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding". That may well be the case here. Apr 24 at 11:38
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    Because clearly, a misunderstanding did happen; the question now is whether the average reasonable person was prone to the same mistake, which would probably qualify the conduct of the seller as "creating a likelihood of confusion". Note that in a narrow decision, the Pennsylvania Supreme Court held that this does not require "evidence of intent": The mere fact of being confusing is sufficient. The seller bears responsibility for being clear. Apr 24 at 11:46
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A reasonable person would agree that such a customer would have taken steps to avoid such charges if they had realized the consequences beforehand.

If a practice that leads to this bill comes under various states' Consumer Protection Laws (like against false, misleading advertising, hidden fees...), you may have a case and eventually recover damages.

Note that some states limit or don't allow Private Action (possibility of a private citizen to file a civil claim) on those types of violations (most notably on false advertising).

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  • There's nothing wrong with the advertising in such cases though, so far as I can tell.
    – user541686
    Apr 21 at 21:49
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    Consumer laws may impose additional requirements about notice and consent, eg to suspend the service and tell the customer the cost is going to be $x per <whatever> and do they want to continue Y/N. Or that some additional confirmation from the account holder is required, so the child using the phone doesn't just press Y and carry on. In other words the spend must be an active choice rather than something that happens passively. Additionally that the consumer is able to take that choice from free will, and not in some kind of degraded mental capacity. Apr 22 at 11:27
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    @user1908704: Note however that cloud computing is a weird edge case, in that it's nominally a B2B product rather than a B2C, but in practice regular people (mostly hobbyists) can and do buy cloud services. This creates a mismatch of expectations (consumers are used to being warned before spending large amounts of money, for example, whereas a business would likely be very upset if you turned off their service and asked them to re-confirm something they've already budgeted).
    – Kevin
    Apr 22 at 19:13
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The contract might be unconscionable because "no reasonable or informed person would otherwise agree to it". The concept of unconscionability is more established in Canadian law, but Wikipedia does cite some American case law.

The subclass of "Substantive unconscionability" is concerned less with ensuring clear negotiation and sober consent led to the contract, but rather with preventing grossly unfair outcomes:

Procedural unconscionability is seen as the disadvantage suffered by a weaker party in negotiations, whereas substantive unconscionability refers to the unfairness of terms or outcomes... Where a seller vastly inflates the price of goods, particularly when this inflation is conducted in a way that conceals from the buyer the total cost for which the buyer will ultimately be liable.

One could argue that a mobile phone contract that has obscure and seldom-used clauses written for a time, decades past, when data roaming was far more expensive, could be deemed unconscionable to enforce today.

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  • The interesting thing regarding such cell phone bills is that (a) some people would agree to such contracts on the basis that they don't believe they would roam internationally (and then do it by mistake), and (b) even if you believe nobody would agree to these now, some of these contracts are old, and this kind of contract would've been much more agreeable back in (say) 2007.
    – user541686
    Apr 23 at 7:40
  • @user541686 Other aspects of legal unconscionability might apply, e.g. the unfairness of the outcome due to vastly inflated pricing. (Edited my answer.) Apr 23 at 15:36
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A contract has to be a meeting of the minds.

In 2024, having to pay for example $2000 for a single short voice call, especially because of a service provider which did not make it clear that it will cost anything more than pocket change (especially if the service provider made a misleading or sneaky user interface), is not something a reasonable person would have agreed to.

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    Can you provide any supporting case law to support this? It sounds like your second paragraph is selecting one example, but you haven't provided a reference so it can be verified. Apr 22 at 7:45
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    @TobySpeight: Unfortunately none of the answers here provide case law to support this...
    – user541686
    Apr 23 at 7:40
  • Good point raised by @user541686, +1 Apr 23 at 9:37
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    @user541686: Maybe that's because no corporation dares test it beyond the $40 or so the current month's phone contract would normally be.
    – Joshua
    Apr 23 at 20:53

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