Sprint loses class action suit in battle over early termination fees
By Jacqueline Emigh | Published July 29, 2008, 6:00 PM
As the legal pendulum continues to swing away from cell phone carriers' early termination fees [ETFs], a judge in California this week ordered Sprint to pay $18.3 million to customers who launched a class action suit over fees charged for ending their contracts early.
Sprint must also credit another $54.5 million to customers who were charged the fees but haven't paid them yet, under the court ruling.
Although financially struggling Sprint isn't as well positioned to carry the freight, Verizon Wireless didn't fare well either in settling a similar case in California last month for $21 million just as proceedings got under way.
While the court actions in California will have no direct impact on wireless customers in other states, the Federal Communications Commission (FCC) is now considering a variety of federal proposals around what to do about ETFs. Some telecommunications companies have lobbied the FCC to protect wireless carriers from class action suits filed in state court.
At an FCC hearing in July, however, FCC Chairman Kevin Martin raised the possibility of a plan calling for all carriers, including Sprint, to reduce ETFs over the life of the contract. Some carriers -- including industry leaders Verizon Wireless, AT&T, and T-Mobile -- do so already.
As previously reported in BetaNews, at an FCC hearing in June, Martin discussed other proposals, including the prospect of levying "variable fees" based on the cost of the wireless handset.
This is one more example of the class action system working to the consumer's benefit. Yes, most of us agreed and went into the contract knowing full well that we're "stuck" for a year or two, but there's no reason we should be stuck if we dropped $200 for a phone, that they paid $350 for. I worked in the cellular industry for five years, so I'm quite familiar with it. Sometimes an industry needs a swift legal kick in the butt to progress forward to the next step. All of the other carriers will be filing settlements over the coming months, and hopefully we'll have terms settled nationally by the end of the year.
Another item of interest to people should be the AT&T Mobility Third Party Application Class Action Settlement. That settlement allows everyone (not just California) allowing users to claim refunds for some, if not all, of the ringtones, games and other applications purchased on AT&T mobility prior to May 2008. You can check it out here.
http://www.topclassactio...ntent-refund-settlement
If you'd like more information, or have any questions you'd like to ask an expert in the industry, please feel free to reach out to me directly. My information is available on my site.
Warm Regards,
Scott Hardy
http://www.topclassactions.com
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|I am glad that we finally are putting our foot down on the corporate america and their abusive nature to customers. I have been with Sprint for over 9 yrs and I can say that the past 3 yrs have made me finally decide to end this relationship. I moved to the west coast and suddenly encured bad service, charges for each and every feature on my cellphone plus uneducated customer service people in the area stores. They do not have any customer loyalty for me; enlight of my long history with them. When told that I was terminating my service I was given the warning-'If you terminate before your contract is done you will be charged the fees.' 'AND THIS JUST TWO DAYS AGO!!!!' Enlight of their legal battles. So I say-'YAH!'. It is about time we said 'NO' to greedy corporate CEO's.
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|dhjdhj...How dare you suggest that! LOL!
What would you do if someone could not reach you at 3am in the bathroom?
And I just hope you have call waiting as well so that no one should suffer the indignity of waiting for 2 minutes as they interrupt an already ongoing "essential" conversation!
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|I can't help but wonder whether we all really need cell phones as much as we think we do?
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|As popular as it is to b!tch about the policies of the companies (and I am also one who is not a fan of them), people have still freely entered into a contract.
The terms were stated in advance and they had the option to refuse to enter into the agreement.
Personally I have refused to do exactly this with many of the services so many seem to feel are necessary.
It is not the court's responsibility to now come and invalidate the agreement simply because they happen to prefer another arrangement.
Nor is it the responsibility of th courts or government to protect competent (at least as defined legally! ;-) individuals from themselves!
This social engineering rather than the strict interpretation of the law is a trait that characterizes California courts in particular.
You can cheer if you like, as it reflects a pretty screwed up sense of equitable treatment under the law.
But I must disagree with the ruling - as much as I disagree with many of the various companies' policies.
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|If vendors of an essential product (which arguably a cell phone is for many of us these days - I won't get too deep into arguing that for the moment) collectively create a situation where consumers have no choice but to agree to disadvantageous terms, the law has to step in and protect.
The execution in this case is questionable as you state. I suppose the issue originates from a transition from a luxury item to one of commodity and basic need. For luxury items you pay a premium whereas commodities should be accessible under fair terms. A better way would probably have been to say OK, we realize that a cp is an essential item at this time and age and regulate consistently and fairly across all carriers - which they still didn't manage.
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|If only what you assert were valid.
An "essential service"? Really!
But of course they are! Landlines are not sufficient - especially if you want to text you bff continually during school. LOL!
And you are forced to accept this particular contract? Hardly!
Oh, but of course it is "essential" that you have the latest trendy phone, as basic service form any number or alternative providers, be they major carriers of pay as you go models just aren't sufficient if you have to have an iPhone!
But then the true irony is that the drug dealers and perps have all discovered just how "essential" an untraceable pay as you go cell phone is. And they don't have ANY problems with service contracts!
If you don't like the terms, there are plenty of alternatives, from pay as you go, to landlines to Skype phones!
The irony is that it is not the users for whom a cell phone is truly ESSENTIAL who are complaining! They are not jumping carriers for the latest ringtone offer or trendy phone offering! They are not the ones generating the churn!
So it would be nice if we identified ACTUAL factors that are driving this and not imaginary strawman arguments that everyone is a transplant surgeon who simply must be available at a moments notice and who simply must have the trendiest phone model every 3 months!
Essential my posterior.
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|Yes, essential. It has become so. It is taken for granted in the business world that you have a cell phone. Not everyone is a soccer mom with the latest trendy thing whose phone is a fashion accessory, or a teenager/college student who can't detach themselves from their friends for a few minutes. Yes, many of us are actual adults with careers who are presumed to have a phone but whose phone bills are not funded by our employers.
Further, the world isn't what it was in whatever decade you're still living in. Both spouses do typically work, do typically drive around a lot, do often have long commutes as the sprawl phenomenon is making its way even into midsized cities, and we're all a hell of a lot more out-and-about than ever before. A whole lot of good the landline does when you're not at home most of the time.
You're free to argue whether it "should" be this way, but the fact is that it IS this way. Cell phones certainly aren't essential for most teens, and arguably for most college students, and maybe not for a lot of the soccer moms who have no job and just want to be in reach while they're getting the pedicure, but there are vast numbers who DO need them who are without question at the mercy of an industry whose contract terms contain provisions that are uniformly unreasonable and for which the consumer has no bargaining power.
I would definitely say that it is unconscionable to charge a full termination fee as compensation for only a portion of a contract that remains unfulfilled. Pro-rata application is fair, and this is how the early termination fees have always been applied by my own employer (a high performance enterprise IP services provider).
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|Nonsense.
And some feel cable TV is "essential " too! In fact, shouldn't it be a "right"? LOL!
So, you have an entire day and the prior evening to plan and communicate and yet you cannot stand to be apart during your commute? As I read that I almost started to cry!
Maybe you should agree on the pizza toppings or whether the bedroom toys need batteries before you leave to return home. Well, your failure to plan on your part, doesn't constitute and emergency on our part!
And if you NEED a phone for work, several factors that invalidate your whining are at issue. First, if its SO essential, why would you be subject to issues of early termination? Remember, its essential! And if your work requires it, if you have any brains, or a competent accountant, it is a business expense. And if you are as essential as you seem to think you are, it is easy to make it a condition of employment that the employer pick up the tab.
YOU are the one arguing that a cell phone SHOULD be considered essential. You may even fly by the seat of your pants in such a manner that your lack of planning seems to make it essential. But the fact is, except for being in route, alternatives such as landlines and skype do just great.
And the point that is almost completely missed here - you know, the topic of the thread...if it is so essential and you have done your due diligence and selected the proper plan, you WON'T BE TERMINATING THE SERVICE EARLY!
The ones falling victim to this are those who ARE jumping from service to service and upgrading from phone to phone! They are NOT the ones for whom a cell phone is so essential that they are terminating their service! DUH!
After all, we certainly wouldn't want to confuse you with your non sequitur assumptions that posit a cell phone is so essential that you will be terminating your service contract early! And if your plans are so uncertain that you do not know if you can live up to the terms of the contract for your so essential necessity, what prevents you from identifying and using a service that features terms of service and a contract period more appropriate to your situation? Hmmmmm???
You are not only "essential", you embody the mindset of the perfect victim.
Your problem is that you confuse "convenience" with "essential". There is a difference.
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|You know, you could contract your pamphlets by at least a factor of 80% if you would take it easier on the crack and make fewer assumptions out of your mum's basement.
My SIM-lock free device is an essential business tool which runs on corporate rates/contracts you Muppet.
This suit is about locking people into contracts that have clauses such as no carrier obligation to maintain service or any value for the customer and if you don't like it you have to pay up.
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|"and if you don't like it you have to pay up."
Spoken like the perpetual victim you are Eurotrash.
You see, the other option is that if you don't like it, you don't sign the contract!
But then cell phones are essential for he Euros! You see, the majority of the continent doesn't have wired access.
And how else would the relatives of the tens of thousands of people who die when the temperature reaches 100 degrees F be reached who can then ignore the calls as they are too busy enjoying their summer holiday as the morgues overflow due to their essential misplaced priorities!
Not to mention that the entire tragi-comedic episode worthy of a Monty Python routine could be avoided if the temperature stressed folks would simply draw a cool bath and lie in the water allowing to act as a heat sink .....
...wait a minute....let's remember about whom we are talking!
Baths?! Right! Well, one can dream!
These are the same sophisticates who haven't yet discovered the complexities of ice as they sip their warm Coca Cola aperitifs sold for absolutely obscene prices!
Yeah, you tell us about how things should work!
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|I did agree to the contract, but I was still shafted. I was charged ETF just for not renewing.
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|I have to agree, times have changed.
10 years ago cell phones were a luxury, not a commodity. People use cell phones nowadays for 2 reasons, to keep in contact and because it is essentially cheaper than a landline. This is fast-paced world now. People travel more, stay home less. Like everyone else the companies need to change with the times.
I applaud those like Verizon that have decided to alter the ETF contract and prorate based on length of term. Although the reasons are probably more legal than anything. I doubt they want to deal with another lawsuit.
Every company needs to look at their model and decide if it needs to change in order to keep going. Every company does and every company will makes changes. Thats the way it is.
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|This is why the companies in America are going under. A contract is a contract. If these people received a discount on a phone in return for a 2 year commitment then the agreement should be honored by the customer. If they cancel early then the fee should be paid as agreed. If it was a medical bill or speeding ticket or any other government charged bill it would have to be paid or their checks would have been garnished let alone it making it to a lawsuit. Grow up and honor your commitments!! My name is Reginia Large
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|There is no discount. If you want to see how much a new phone cost, just check eBay. It's nowhere near MSRP.
Even if you bring your own phone, you still stuck with a contract.
Cell is a necessity IMO. Locking customer in for a lengthy contract is anti-competitive.
Just think about the next time you go buy fill up your tank, and the gas station say you must to sign an exclusive contract with them or you get no gas from them.
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|A cell phone is nothing like gas. You can get by without a cell phone. You can't (at least in Las Vegas) get by with gas.
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|Of course you can. Move within biking distance of where you work. Arguably, few things are essential. What is "essential" is subjective, and for reasons I've discussed above, a cell phone is essential for many people for different reasons than gas. You aren't necessarily the proper arbiter of what IS "essential" as you can only speak to your own circumstances and not to mine or the other guy's.
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|Why not?
You can walk...
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|i think this lawsuit is also based on prorating the termination fee isn't it?
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|Yes. The purpose of a termination fee is to compensate the carrier for its revenue loss resulting from a breach of the agreement on the part of the customer. It should never be about punishing the customer or locking them in. If the carrier is compensated, any lock-in or punative action beyond that fair compensation is just anti-competitive. Pro-rating the agreement does fairly compensate the carrier, because assuming you break out with 2 months to go, has the carrier really suffered a loss to the same extent as if you broke out with 23 months remaining? No. So why should the carrier be compensated the same?
Again, the fact that the consumer agreed to these unconscionable terms is beside the point, because the consumer has no bargaining power and can often find no other carrier whose terms are more favorable. I am adamant about this having become an essential service for many, as in my case and most of my other colleagues it just isn't possible to do business without a cell phone. Come on, guys, this is 2008. Things do change. Nonessential of one year is the essential of another. Didn't we do business without computers before? Another thing that COULD be done without, ala the green ledger pads and typewriters, but does that really make sense?
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|Can't believe dad switched from AT&T to Sprint just because of a phone (LG Rumor..) o_O do'h..
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|I have the same phone from Alltel (LG Scoop). It isnt a great phone, as I have only had it for a few months and most of the keys are worn out. I dont do as much texting as most would think for that to happen. They are very cheaply made phones.. :(
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|So let me get this straight. You sign a contract that says if you break this contract you owe x number of dollars. So you decide to break that contract before it expires and expect not to owe the fees listed in the contract so you sue and win. How sad is that.
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|there are two sides to every contract. therefore if sprint failed to provide the services it promised, then customers should not have to pay for bad service.
the sad part is that companies actually believe that they can get away it and for the most part they have.
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|I bet if you read that contract the services Sprint needs to provide is very minimal. Plus I bet a majority of the people in this suit just wanted to switch providers and Sprint's level of service has been the same.
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|If you need a cell phone and they all charge ETFs, what are you going to do.
The whole point of ETFs is to keep customers locked in with their bad service, keeping you from going to another carrier that has better service in your area.
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|Solution: buy the phone outright, skip the contract and sign for a month-to-month service. Don't sponge off their subsidised handset plans and then expect to get out of them for free when you haven't yet paid back the cost of the phone.
Out of interest, what sort of ETFs are we talking about? Australian ones seem to vary greatly - some just make you pay for the phone, some have a set figure (like $300) then make you pay a percentage of that amount based on how many months are left in your contract... how does it work in the US?
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|My parents had Sprint for 7 years. They ended up canceling their service when they were notified Sprint was terminating their analog service and their phones would no longer work. Yes, their phones were THAT old! They thought it would be a good time to find better service. They went to another carrier and ported their number without contacting Sprint first. Sprint charged them a total of $400.00 cancelation fee because two months earlier they called and changed their calling plan. No contracts were signed and they were not advised they were entering into a new contract.
I believe in early cancelation fees if you're getting a free or substantially reduced price phone. But what the heck?!!!! They actually paid full price for their phones 5 years earlier when they needed replacements!!!
Weeks earlier, my brother-n-law received a letter advising him they were canceling his service because he roamed too much. He was in the Navy and the base didn't have adequate Sprint coverage. WTF?!!!!!
Talking to them was completely pointless. On the whole, they have HORRIBLE customer service. They prey on the uninformed and elderly. Sure the CEO now says "mistakes were made" but it's a bit too little too late.
As far as Sprint is concerned, the best they can do for the consuming public is rot on the trash heap of companies who fail.
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|All Sprint customers are required to agree to this to get service:
"You agree that neither we nor our vendors, suppliers or licensors are responsible for any damages resulting from: (a) anything done or not done by someone else; (b) providing or failing to provide Services, including, but not limited to, deficiencies or problems with a Device or network coverage (for example, dropped, blocked, interrupted calls/messages, etc.); (c) traffic or other accidents, or any health-related claims relating to our Services; (d) Data Content or information accessed while using our Services; (e) an interruption or failure in accessing or attempting to access emergency services from a Device, including through 911, Enhanced 911 or otherwise; (f) interrupted, failed, or inaccurate location information services, (g) information or communication that is blocked by a spam filter, or (h) things beyond our control, including acts of God (for example, weather-related phenomena, fire, earthquake, hurricane, etc.), riot, strike, war, terrorism or government orders or acts."
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|...
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|You parents are a fool, why would they not call Sprint to at least check before they port there numbers.
Also you are pissed because your brother was roaming too much. That kinda tells you maybe he is better off getting another phone. They gave everyone else to move there plans.
I am a b2b account manager, you think you have problems try working with a 290 phone account. They get alot more screwed then any of you.
My gf did have an issue, it was a techincal issue. I had to call up and a consumer, but I did get it taken care of.
If you ever have issues just call this number.
Sprint Account Retention 1-800-626-6328
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|Most of the time it is just a flat fee no matter where you are in the contract.
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|I bet if your parents read there contract it says that changing anything on the account will extend the contract. That's the way it is in a lot of things with contracts like this.
As for your brother-in law I bet in the contract it says we reserve the right to cancel you if you roam too much. I know AT&T has it in their contract. so he should go get a phone that has better coverage where he's at.
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|what, no additional clauses like:
(x) customers agree to pay sprint all the money demanded and without complaint,
(y) sprint is not accountable for providing poor service, including but not limited to connections and customer service,
(z) if the customer finds a service provider that offers better services for a lower cost, the customer agrees to pay us termination fees to keep us from making a credit entry into your report.
seems that Sprint should hold itself accountable for its own shortcomings, including crediability.
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|I've already covered point "y" in my previous post. As for point "z", this is covered in the contract. You can cancel at any time for any reason. If you live inside the coverage area you simply pay the ETF. Most people simply don't understand the contract they enter into with mobile phone companies. When you enter into a contract you are agreeing to pay for mobile phone service. Not necessarily GOOD mobile phone service, just some type of service. This means that normally the only way to get out of your contract without an ETF is if you live outside the coverage area and have absolutely no coverage whatsoever (zero bars).
The reason for this is largely because a wireless device will never have the same level of quality as a hardwired device so mobile phone companies can't guarantee the quality of service you'll get in any given area.
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|I BELIEVE ANYONE SHOULD BE ABLE TO GET OUT IF THEY WANT TO. ESPECIALLY SINCE WE ARE PAYING MONTHLY SO THEY ARENT LOSING MONEY.
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|Things have already been changed, as far as the local news had mentioned months ago.
However, the wireless industry, like the cable industry, is in need of a huge shakeup.
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|I'm with Sprint and I don't see a change. A friend of mine was over charged 3 times and now she called up and they won't fix it this time saying they already did it 2 other times. Its their fault. Another friend of ours was over charged as well. I have been lucky enough to not have been over charged but I have had other problems with Sprint.
I see their trying to do things to make them look more attractive to customers...being first with 4G and among other things. It might not be enough though.
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|"A friend of mine was over charged 3 times and now she called up and they won't fix it this time saying they already did it 2 other times."
Oh..They wouldn't want to do that to me. I guarantee you I wouldn't get off that phone until I got my refund.
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|Just another nail in Sprints coffin. Can they get out of this rut? I don't know.
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|Your face
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