Dodging Verizon's $30 upgrade fee

This post comes from Ben Popken at partner site SmartMoney.

It's hard to say which will annoy customers more: Verizon's latest cellphone fee or the company's unlikely justification for imposing it.

In recent weeks, Verizon started charging existing customers $30 to upgrade to a new phone when they renew their contract. AT&T and Sprint charge $36 and $18, respectively, for the same thing, so one might forgive Verizon for just doing what everyone else is doing.

But Verizon's excuse for adding the charge is pretty rich. The millions the company rakes in from the fee will be used to offer customers "wireless workshops" and "online educational tools," among other things, spokeswoman Brenda Rayney told SmartMoney. According to the press release announcing the fee, there will also be "consultations with experts who provide advice and guidance on devices that are more sophisticated than ever."

Here's an idea: How about I let you know when I want to spend my Saturday hanging out in a Verizon store learning things I could read in the manual -- and then you can charge me a $30 admission. Otherwise, I'm good.

What twists the knife harder on this latest move is that just a year ago Verizon abandoned its "New Every Two" program, which gave customers signing renewing two-year contracts $30 to $50 off their new phone. So now, not only do you not get the $30 credit when you upgrade, you have to pay them a $30 fee to get the new phone. That's as much as an $80 price hike! (When I asked about this point, Verizon declined to comment.)

Sure, in out-of-pocket terms, $30 isn't that much. But to pay for "wireless workshops"? Say that it's for building out the 4G network, or, better yet, say, "Hey guys, we feel like making more money and -- at least we don't charge as much as AT&T." Don't insult our intelligence.

Ways to get around the fee

Annoyed, I looked into ways for avoiding the $30 upgrade fee. (Post continues below video.)

For starters, Verizon suggests it may be possible to offset the fee by trading in one's old phone. "While trade-in values vary, they can get 'cash' in the form of a debit card for their older phone and use that money to help offset the Upgrade Fee," Rayney says. You can check out that program here.

Customers may even get a better price selling the phone on their own and keeping the cash. However, while iPhones tend to hold their value, many less-desirable phones may not cover the $30 fee.

Another promising-sounding alternative I researched involved a three-step switcheroo. First, start a new line of service with the new phone you want. Then, port your old phone number to a third party service, such as Google Voice (here's a guide from Lifehacker on doing so). Finally, cancel the line with the old phone and port the old phone number back onto the new phone, thus keeping the new phone and the old number, and dodging the fee.

But there's a catch: It works only if you wait three months to port the number back. If you do it before then, Verizon's system treats it like you're continuing the same service, and they hit you with the $30 upgrade fee. Curses.

Then there's the squeaky-wheel approach. If your phone is error-prone, complain to Verizon and they may end up swapping it out for free with a new phone. That's one backdoor method to getting a fee-free upgrade. Your mileage may vary, and you'll need to be "lucky" enough to have a faulty device.

OK, so why not just leave Verizon? If they care so little about customer loyalty that they're going to penalize you for staying with them, why give them the satisfaction? Simply switch to a new carrier at the end of your contract and get your newer and fancier phone there. Unfortunately, unless you go with a pay-as-you go plan, you will need to pay the new service's activation fee. Wouldn't you know, it's usually about the same as the Verizon fee you're trying to avoid.

Sweet-talking the customer service rep over the phone into dropping the fee sometimes works, and some credit unions waive cellphone plan activation fees for their members. Also, wireless retailer sites such as Wirefly periodically run promotions waiving activation fees if you buy through them. But depending on how frugal you're feeling, saving $30 may not be worth the hassle of jumping ship.

There is one foolproof method I found for avoiding Verizon's new $30 upgrade fee: Buy your new phone from someone other than Verizon -- on eBay, for instance. Then you can add the phone to your account, sans upgrade fee. Because you're already a Verizon customer, there's no activation fee. Success -- that is, if you can find a phone cheaper than Verizon's discounted rate. This method works for avoiding upgrade fees at other carriers as well.

However, if you buy your phone from someone other than Verizon, be sure to check that the phone hasn't been reported as lost or stolen. A "hot" phone can't be activated, leaving you with a pricey brick. Ask the seller for the ESN, MEID or IMEI numbers, which are basically serial numbers for your phone, then check them out with Verizon. You can enter the number at this Verizon page or call Verizon and they'll do it for you.

If you buy a phone on eBay, you won't be locked into a new contract with an early termination fee either, but you also won't be able to get the discount pricing Verizon provides with signing those long-term contracts. It's a toss-up depending on what you value more, flexibility or price.

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In the end, Verizon's new $30 upgrade fee is bound to become the new normal. I took an informal poll of a few friends who were on Verizon. At first they were shocked, because they hadn't heard of it, then incredulous, because the explanation was so inane. However, when I asked them if the fee was enough to make them move to a new carrier when it came time to upgrade their phone, they said no. "After all," my friend Melinda said, shrugging her shoulders, "it's only $30."

Looks like Verizon's got our number on this one.

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