SAN DIEGO -- That couple of dollars charged for "USA Regulatory Taxes" on Sprint PCS cellular phone bills is now the subject of a court order that means customers who don't want to pay it can break their service contracts.

The ruling came in a suit filed by Utility Consumers Action Network, a San Diego group. Attorneys for the group argued that the fees are really a hidden rate increase, and customers are allowed to end contracts when their rates are increased.

In a separate development, a San Diego attorney filed two suits last week that seek to recover money charged to consumers. The suits came in the wake of a ruling by a Superior Court judge in the consumer group's case that the charges -- which also appear on Nextel Communications Inc. bills under a slightly different name --- may be deceptive.

Both companies are contesting the suits, and they have said that the charges are made necessary by federal requirements.

Michael Shames, the executive director of the Utilities Consumers Action Network, said the group's attorneys won a temporary restraining order on July 16 against Sprint that forces the company to release customers from their contracts if they object to the fees.

Judge finds misleading language

The court ruled that the charges were created and named by the company, not by law, and the bill language is misleading. The group is seeking a permanent injunction and an order requiring Sprint to notify customers that they can cancel their contracts, Shames said.

"Our lawsuit said these false surcharges are actually hidden rate increases, and that the company must notify and allow customers to change or end their contracts when there are rate increases," Shames said. "We know of six customers who were not allowed to do that and we're sure there are more."

Sprint spokeswoman Stephanie Walsh said she can't comment on pending litigation.

Last week, San Diego attorney Stephen Morris filed class action suits against Sprint and Nextel over the line item. On Nextel bills, it's called a "federal programs cost recovery fee" and typically totals $1.55 a month.

"These are completely contrived fees," Morris said. "There are taxes and surcharges and regulatory fees that are legitimate, but what we found was these companies are charging their customers extra and concealing the charges by saying it's for regulatory fees when it's not."

Shames says that Sprint's charges generally total under $3 a month. Morris said that about $1.40 of the item called "USA Regulatory Taxes" is pure padding. With about 14 million Sprint customers, that translates to an extra $17.5 million a month, he said.

"This is a big profit center for the phone companies," he said.

Companies deny disguising fees

Both Sprint and Nextel deny that the fees are simply disguised rate increases.

Nextel spokeswoman Leigh Horner said the company has been honest with consumers about what the money is for.

"We changed the working language on our bills in February and tried to break out what each thing is in greater detail," Horner said. "That money goes to paying the costs of three federal mandates from the Federal Communications Commission."

Nextel says the three are: the cost of allowing customers to keep their existing phone numbers if they move to a different company, for improving the ability to identify exactly where a 9-1-1 caller's cell phone is, and the cost of sharing banks of numbers among the providers.

"We believe strongly in the integrity of our advertising and our billing practices," she said.

Nextel has 11.5 million customers in the U.S., according to its FCC filings.

The California Public Utilities Commission does not police the companies' billing practices, a spokeswoman for the agency said. The FCC has not yet looked at the charges in question, but said the mandates for which the fees are being collected are real, spokesman Tom Fields said.

Others charge no such fees

Not all companies add such a fee to customer bills.

Verizon Wireless spokesman Keith Karpe said the company doesn't have an entry like those being fought over on Verizon bills.

"We all fought the federal mandate but Verizon decided not to charge the fees until we see if it runs to more than the 10 cents to 15 cents per customer that we've estimated," Karpe said.

Last week, Morris filed lawsuits he hopes will be certified as class action suits on behalf of Sprint customer Lily Albaisa of Chula Vista and Nextel customer Glenn Jaffe of La Jolla. He hasn't ruled out suing other providers, he said -- he just hasn't talked to any of their customers yet.

Most people won't sue, or even question a charge they don't understand if it's just a couple of bucks, Morris said. Part of the reason people don't challenge the fee might be the long waits and slow answers to service questions.

Morris said his firm has sued wireless providers before and will again.

"The industry is so unregulated and they take advantage of consumers every way they can," Morris said. "We like going after them."

Cellular Telecommunications and Internet Association spokesman Travis Larson decried the lawsuits.

"Wireless prices have fallen 80 percent in the past eight years," he said. "The unregulated market is working for consumers, and it's a shame that lawyers and regulators need to get in the way."

Contact staff writer Marty Graham at (760)740-3517 or at mgraham@nctimes.com.