Verizon Wireless agrees to pay $21 million over termination fees

Verizon Wireless agreed to pay $21 million to settle a lawsuit filed by customers who claim the company's early termination fees are excessive and unfair.

Details of the settlement aren't public. But a Verizon spokeswoman said that the settlement will put to rest claims filed by customers in California as well as customers that are part of a nationwide class action lawsuit.

Verizon denied any wrongdoing. And the spokeswoman pointed out that Verizon Wireless was the first cell phone operator in the U.S. to establish a pro-rated early termination fee that decreases over the time of the contract. Since then, the other three carriers, AT&T, Sprint Nextel, and T-Mobile, have all pledged to go to prorated fees.

The settlement comes as these cell phone operators take heat from the Federal Communications Commission and Congress over the fees. The FCC held a hearing in June in which unhappy customers and consumer advocates railed against the companies for their business practices.

FCC Chairman Kevin Martin said he believed the fees, which in some cases have exceeded $200, were excessive. And he said he was concerned the early termination fees were not being used as a means to recover legitimate costs, but rather as a means to lock customers into a service provider.

The phone companies have argued that the fees are necessary to recover costs. Specifically, they say the early termination fees help cover the cost of phones, which the carriers subsidize and offer as part of a service contract.

So far the legal battles brewing against the phone companies have been a mixed bag. Cell phone users in California initially formed a class in 2006 for a lawsuit against all four major carriers: AT&T, Sprint Nextel, T-Mobile, and Verizon Wireless. But the court separated the cases and each carrier is battling the lawsuits on their own.

Sprint Nextel won a victory in its battle when a jury decided last month that customers had indeed broken their contract with the carrier and that they owed the company $225 million, far more than Sprint Nextel was able to collect to from customers terminating their services early.

Now the judge in the case will have to decide whether the contract that Sprint imposed on its customers was even legal according to California law. A decision on that is expected within weeks.

But with the Verizon Wireless settlement, it looks like the plaintiffs' case may have had some legal merit. A Sprint spokesman declined to comment on what Verizon's settlement might mean for Sprint. But he said the company is confident that no matter what happens it won't be asked to pay damages since a jury already found that customers owed the company more than Sprint was ever able to collect in early termination fees.

One thing is certain. The battle over these fees is far from over. Verizon may have settled, but the issue is still very much alive in the hearts and minds of customers. And the FCC and Congress just may have to take action. The big question now is how far will the government go?

[joetesta70]

I had Verizon's data plan - it stunk. STAY AWAY FROM VERIZON!

[Joe Force]

Next up... a lawsuit for all the premium txt spam they allow on their network. I got a bunch of spam on my phone at a tune of $10 per message. Apparently they allow this junk to get to your phone, charge you for it, then they tell you they have no control over what goes over their network. Verizon needs to pay for this extortion.

[drock207]

verizon ruined my credit and i hope their HQ in basking ridge gets nuked by north korea. $21M is not sufficient. help me out here kim jong il!!!!!!!! can you hear me now?

[cc888]

I agree that early termination fees can seem excessive, but at the same time cellular companies need to cover the expense of the phones that they give away when a contract is agreed upon. They give away expensive equipment in exchange for a commitment to their services. I think it is reasonable for them to recoupe their lost equipment in the form of early termination fees. I am not surprised by the sprint-nextel verdict, but I AM surprised at the Verizon decision. If you are not willing to fulfill your contractual obligation, you should be prepared to return your equipment "good as new". Otherwise, how could you expect these businesses to profit?

[k2dave]

While what you say makes sense, there is also the other side of the issue. Sometimes the carrier is not living up to it's end, providing substandard service. And the customer should not be trapped paying for something they are not getting. Service can change over time also. I do acknowledge the need for some way for the carrier to recoup the cost of a new phone, especially because there is such a selection with various capabilities, but their early termination fees should be structured to reflect the subsidy, and not appear to lock a customer into a timed contract.

[DrummerDude952]

Read my other comment. They should make your early termination fee equal to the discount you got on your phone.

[benjaminstraight]

That is a lot of money.

[dh2008]

had two phones on verizon, for over four years, never went to extra minutes, then add two phones for kids, which in less than a month went to over the limit. so I had all four phones shutdown, to pay the bill, which verizon gave me six months to pay, less than 90 days my account was sent to some collections agency, and I tried to pay the final bill directly to verizon. they said it was locked and refused to take the money, instead referred me to this collection agency. they want $175 per line or nothing. well if you refused to take a payment, then you should write the bill off.

[holterjs]

I was injured and 100% diabled and My disability income was smaller than acustom, so I wanted to stop my family plan but keep my original line? I was a verizon customer for 10 years. They told me that not being able to pay my bill was not an excuse to change my plan?
They immediatley sent this to collections and ruined my credit with in two days of my phone call! It cost me over 600.00 to collections !

[OMFG_righton]

LMAO @ drock207's comments. Here here, my brutha from another mutha...verizon is evil....

[DrummerDude952]

If they say the fees are for helping the cost of phones, then the ETF should be equal to the discount you got on your phone for 'New Every Two' or such.

[bbtrad73]

Where do I get in on this! I had 5 phones with Verizon Wireless and they charged me 179.00 each phone when I was barely a month left to go on my two year contract!!!!!!!!!!! I want my money!!

[termite30815]

where do i sign up I had 1 week and I had to pay for 3 phones . I had been with Verizon since they took over cell one

[auntiec1129]

I have to admit as a consumer I'm a little tired of people's whining. Each person who has ever agreed to a two year term with a wireless company has the ability to review the terms and ask questions. Its not major corporation's faults if they are able to profit off our laziness of not reviewing where we put our signature. Yes, I agree a $200 ETF is excessive but a company having to pay over $21million in costs is also excessive. I think people need to take accountability for their actions and stop looking for places to put blame. If you disconnect your line because you cannot control your blabbering teeanger and your billed an ETF stop crying! Life is too short to dwell on the little things, lets all put on our big people pants and deal with the consequences of our actions.

[termite30815]

when you been with the Verzon 5 years you should not have to pay a fee. You have for the phones ten times over.

[holterjs]

I was injured and I am 100% disabled. When I called verizon so to stop the family plan and just keep my original line I had for 10 years I was told that not being able to pay my bill was not a reason to change my plan?
Two days latter I was recieving calls from a collection company? Verizon would not let me pay them? Verizon also said it was not in collections? I paid over $600.00 to get this cleared up on my credit!
Thanks Verizon!
Can you hear me now?