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Still renting your phone? Why?

Some senior citizens are spending hundreds and even thousands of dollars to lease telephones they could buy for a fraction of that cost.

Most started leasing their phones decades ago when that was common and have been paying the charges on their monthly bill ever since. Often the payments go on until a senior's children notice the "leasing equipment" fee and question it.

In some cases, unsuspecting telephone customers have spent more than $10,000 to lease phones they could have purchased for around $20.

In 2002, AT&T and Lucent Technologies agreed to a $350-million class-action settlement for leasing telephones to 29 million people for far more than it would have cost to buy the same equipment. The phone companies never admitted any wrongdoing. 

Despite this negative publicity, AT&T still had 580,000 phone-leasing customers as of July 1.

Phone leasing was commonplace until the break up of Ma Bell more than 20 years ago. Since the break up, consumers have had a staggering array of choices for local and long-distance phone service, which includes buying their own telephones. Some of the original phone renters continued leasing and many are still paying.

Dick Muldoon, a spokesman for Alcatel-Lucent, which operates AT&T Consumer Lease Services under a brand licensing agreement with AT&T, says monthly lease rates range from $4.45 for a basic model telephone to $19.95 for a full-featured two-line cordless product.

Currently, the company's most popular leased telephones are the Signature Series products, which "are much more robust than the average telephone, are available in a wide selection of colors and have special features, such as a real bell ringer, which we know our lease customers want.

"Many of our customers tell us they lease for the products, benefits and services that leasing provides," Muldoon said in a prepared statement. "The No. 1 benefit they cite is unconditional product replacement."

But some organizations believe phone-leasing perks are misleading. After all, how often does one need to make phone repairs, asks Chris Baker, senior policy adviser with AARP's Public Policy Institute.

"We think it's really sad," Baker says. "It's a business model that's built on deception because there's no good reason why people would want to continue leasing their phones. Even to stop (the program), you have to package up this phone and pay for the shipping costs, or the leasing company will charge you for a phone that has no other value."

Baker says many phone renters are on limited or fixed incomes. They probably don't even know they're paying for the phone, he says.

"It's the kids who find out and they take care of it," he says. "It's sort of a difficult problem to find."

Next: Some may still want to rent landline phones.
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