Tuesday, January 29, 2008

News: Class Action Against Verizon has been Certified

I found an interesting article concerning Verizon Wireless today.

Apparently, a huge class action against the wireless network has been certified by an arbitrator. How huge? Well, the RCR News article says that Verizon may be forced to pay nearly a billion bucks in refunds for the early termination fees they have charged over the years.

This article caught my interest because Verizon wireless as well as other mobile phone carriers have class action policies stated in their wireless contracts or terms and conditions. Here's the statement from the wireless contract or terms and conditions of Verizon:
THIS AGREEMENT DOESN'T PERMIT CLASS ARBITRATIONS EVEN IF THOSE PROCEDURES OR RULES WOULD. IN EXCHANGE FOR YOUR AGREEMENT TO ARBITRATE ON AN INDIVIDUAL BASIS, WE'RE PROVIDING YOU A FREE INTERNAL MEDIATION PROGRAM. MEDIATION IS A PROCESS FOR MUTUALLY RESOLVING DISPUTES. A MEDIATOR CAN HELP PARTIES REACH AGREEMENT, BUT DOESN'T DECIDE THEIR ISSUES. IN OUR MEDIATION PROGRAM, WE'LL ASSIGN SOMEONE (WHO MAY BE FROM OUR COMPANY) NOT DIRECTLY INVOLVED IN THE DISPUTE TO MEDIATE. THAT PERSON WILL HAVE ALL THE RIGHTS AND PROTECTIONS OF A MEDIATOR. NOTHING SAID IN THE MEDIATION CAN BE USED IN A LATER ARBITRATION OR LAWSUIT.
Well, I'm not really an expert in law but it seems that the fact that this arbitration has been certified is not favorable to the beleaguered wireless network.

The arbitrator who made the decision is Eugene I. Farber, a former federal judge and senior arbitrator-mediator for the American Arbitration Association in White Plains, N.Y. He explained his decision in this statement,
“I find the claimants have complied with the criteria for class certification. My decision is also motivated by my conclusion that as a matter of equity and fairness, millions of class members are entitled to adjudication of the central common questions of fact or law in this arbitration related to whether the $175 early termination fee imposed by respondents Cellco Partnership d/b/a Verizon Wireless … is based upon an unenforceable liquidated damage clause.”
Farber's decision to certify the class action has historical significance as well as financial implications. Financial because the refunds that Verizon make hand out is estimated to be worth nearly a billion bucks. Historical because with approximately 70 million members of the subscriber class it is the largest class ever certified in arbitration. This class action suit is also the largest class ever certified on a contested motion in any type of forum, litigation or arbitration.

The implementation of early termination fees have always been a controversial issue. Consumer groups and customers have complained that it is an unfair practice and they have succeeded in forcing some carriers to make their ETFs pro-rated. In fact, Verizon Wireless was the first carrier to announce that their ETF will be prorated.

If this class action suit succeeds then Verizon Wireless consumers will gain a great advantage. They will be able to seek a refund worth nearly a billion dollars. And maybe this ruling will also trigger similar suits in other wireless networks because they too have been imposing early termination fees on their consumers. It may also change some of the statements in the wireless contracts and terms and conditions that will be signed by subscribers.

I'll continue to monitor the progress of this development. I'll also make sure that I post any updates of this class action suit as well as other related incidents in this blog.

3 comments:

UFstudent said...

I am looking for ways to join this suit.

My contract was renewed without consent when I changed my calling plan features (as of October 2007 when federal bill was introduced to make this illegal, they stopped this practice). I refused to pay the early termination on the grounds of illegal practices. Since they changed their rules in October, I attempted to return as a customer because my family is still with them and they rely on in network free calling. Verizon brought up the past....refused a plan.


Their aggressive actions hurt my credit and they refuse to remove the stain - even though they admitted their practices were no good. I want to play hard ball too now...I can hold a grudge just as long as they can.

HOW DO YOU GET IN ON THIS CLASS ACTION SUIT? I want in and can't find contact info.

James Messick said...

My contract with Verizon begin on Feb 9,2002, so I was with Verizon (2 phones) for six years. In January I bought a new house where I cannot use Verizon due to dropped calls, so got an Alltel phone on March 13, cancelling one of my lines with Verizon. My next bill showed the full $175 early termination fee. After much time on the phone with customer service, Verizon informed me that since we last got new phones on April 23 2006 I was 5 weeks shy of my two year contract date so must pay the full disconnect fee. I always believed my renewal date to be in February, and had heard that Verizon now prorates early termination fees. I guess I'm wrong on both counts, but Verizon's policy of charging so much seems ridiculous. CS rep finally "transferred" me to a useless extention to order Verizon Online services, instead of the customer retention department. If being so close to my end of contract isn't enough it seems that not being able to keep a good signal at my new residence would be grounds to let me off the hook here. In my experience Verizion CS never wants to give an inch on any billing issues.

Mr said...

I'm interested in helping to start a new class action suit against Verizon for their underhanded "pro-rating" scam whereby they charge consumers hundreds for minutes used resulting from any mid-cycle plan change.

Rather than blending the plan, they first encourage the change. It can be an increase in minutes, a decrease, or even status quo with some other plan change such as the removal of a second line. The minutes under the plan are converted to a pro-rated daily allowance and suddenly the consumer, who was not over their monthly minutes, is over their monthly allowed minutes. The surprise comes in the next bill and can be hundreds of dollars.

They refuse to make any correction, citing the agent "explained" the pro-rate policy, which recordings of the calls will prove they do not. They use the word and project the idea of a blending rather than an automatic penalty.

I'm ready to be deposed and I'd like to see some consumer protection finally delivered to this incredibly fraudulent business. They are stealing from us at every turn and previous class action penalties have done little to deter their underhanded practices. Let's bring them to their knees.