07/29/2008, 3:25pm, EDT
Tuesday, July 29thSprint loses suit over early cancel fees
Sprint became the potential center of a legal precedent today in a ruling in a California court that would have the carrier pay $73 million in refunds. The decision follows a case in which former customers argued that Sprint had unfairly charged some customers early termination fees (ETF) for ending their service before the end of their respective contracts. The plaintiff's lawyers argue that their win is a blow against ETFs as well as against carriers' hopes to protect them through a proposed FCC deal, which would override state lawsuits in exchange for moderate concessions on the fees.
"This ruling sounds the death knell for the industry's petition seeking a preemption ruling from the FCC -- a ruling the industry has never been able to win in court," says attorney Scott Bursor.
Most carriers offer exemptions for changes in service or other special circumstances but otherwise charge a fee meant to discourage subscribers from abandoning a contract in mid-term, depriving the provider of some of the money it hoped to recover by subsidizing the phone. Critics have accused carriers of simply trying to collect extra profits from departing customers and in the past have successfully forced trade-offs, such as gradually reducing the fee over the length of a contract.
Sprint is not the only firm facing penalties for discounts and is joined by Verizon, which agreed to settle for $21 million to avoid a definitive ruling, and an ongoing suit against AT&T.
The defendant has up to two weeks to answer to the ruling and potentially soften the results but would set a precedent if legally required to pay compensation, supporting both the AT&T case as well as future complaints that would accuse carriers of unfair ETF rates.
ETFs became a particular sticking point in the US Congress after the introduction of the original iPhone. With no approved option to unlock the Apple device, customers unhappy with their service must not only pay extra to leave but also can't unlock their phones to use them with T-Mobile.
Filed under: iPhone, gadgets
Other story tags: AT&T, Verizon, sprint
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All day!
Now, maybe AT&T will get nailed or they will preemptively take action and not charge ETF for those who wish to get a newer phone.
ETFs need to go.
It's the only way we'll get true competition instead of this collusive mirage we have now. If phones did what they need to well (place and hold calls) we wouldn't need the deluge of over-featured phones we have now. The true value of the iPhone may be to show that most other phones are simply gimmicks that don't do any one thing well and are at the end of the day no better than the cheapest of the lot. No other carrier of any other service would think to charge this sort of penalty, it is only because of the over-built gee-gaws which by the way might be able to place a call. Build a decent phone or softphone (iPhone), charge what it's worth, and charge me a reasonable price per month. If your phone or network stinks, then make it better and people won't jump. I was on the fence about iPhone 2.5G, I won't get an iPhone 3G - I'll get a Touch and keep my simple phone. I hope they get it right the 4th time (ROKR, 2.5G 3G... next?)
one word - iPhone.
Now you can add $73 Million (or a large portion of that) to how much the iPhone has cost Sprint.
Lame!
Ok.. so let me get this straight. Someone buys a cell phone, they know there is an ETF, they sign the dotted line, and then they cancel before the contract is over and get angry that they have to pay a fee that they agreed to in the first place? Can someone point out how the cell phone provider is in the wrong here? This is insanity! If you don't want to pay the fee, then don't sign the contract! It's that simple. I'm tired of these pointless lawsuits that punish the company when the consumer knew exactly what they were getting into.
simple
Make it so you can get the same service with out a contract. As long as you are forced into a contract to get what you want, they should lose the ETF. If you can do either or, then whatever, idiot that signs a contract gets ETF if he cancels early.
Athens
Hey Athens, that option is available. The problem is that the customer then has to pay the full price of the phone and people don't think the phones are worth that much (even though from a component standpoint they're worth far more than anyone pays for them because of the subsidies). I agree with afaby, this is just stupid consumers that knew or should have know and are complaining because they didn't do their research.
Re: simple
No problem. Pay $699 for iPhone. Then start up plan with ATT without 2 year contract. You're set. What's the problem?
oh
And just because I signed on a line that said I need to pay my mortgage company $$$ a month, I don't think I should have to do that. I mean, come on, that is unreasonable to think that, just because I signed a contract to purchase something, I should have to follow the terms of the contract.