Verizon Wireless settles early-termination suit
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 who 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?
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
The customer knew what the costs were going in, and when they received a telephone or other equipment at a discounted rate or even for free - there was a cost associated with that instrument, and subsequently the need for the early termination clause and subsequent fees.
As to the comments regarding the FCC - frankly, it would be best if government would just get out of our business altogether and let the "Free Enterprise" system float on it's own. Just another frivolous lawsuit and ultimately - we will all pay.
Grow up and accept responsibility for what you agreed to do in the first place.
for being unfairly compared with T-Mobile.
I don't know what planet some of you are living on, but here on Earth, dropped calls, bad/poor/unavailable service is just part of the norm with the cell industry. Nobody I know is "happy" with their cell phone service. Everybody has a horror story.
If my cell phone can get a message that I have voice mail, why can't the original call come through?
That, and the fact that customer service, like most service providers, is non-existent for the most part.
If the service was better across the board for ALL carriers, you'd see a lot less of disenfranchised users looking to to get out of a contract that has them paying for a service they cannot use.
Freemarket Economy? Baby, I want to own a company where you have to pay a monthly fee for at best mediocre service, then have the ability to supercharge you a fee when you have the audacity to want to get out of the contract.
Until service companies start providing a SERVICE, it's all about GREED.
They ALL suck. Period!
- by ChelleT18 July 23, 2009 3:14 PM PDT
- It's funy how so many of you want to do the cry baby thing...but how you can get crappy service in your area adhere to the two years, transfer your service then have them tell you but we extended it for two months because you made a change or upgrade to the service....BS I got screwed on that and wish I had not missed out on the lawsuit!
- Like this Reply to this comment
-
(14 Comments)