Sprint is the Next Target of Class Action Suit

The Class Action Suit menace has struck again.

In this early part of the year, major wireless carriers have been hit with class actions suits for a variety of reasons. Verizon Wireless was sued over the unjust early termination fees they charge in exchange for freedom from their wireless contract. Some consumers also filed a class action suit against T-Mobile for being charged with receiving unwanted text messages. This week the victim is Sprint Nextel Corp according to this RCR News article.

The complaint against Sprint Nextel Corp. stems from allegations that they are defrauding their wireless consumers. The complainants assert that the wireless network has misled and deceived them by extending their wireless contracts without their consent.

This statement from the plaintiffs in the 23-page complaint that was filed in Illinois federal court will explain,

“Defendants have misled and deceived consumers by extending consumers’ contracts for up to two years without providing adequate notice or obtaining meaningful consent to a contract extension when consumers made small changes to their telephone service, such as adding extra minutes or purchasing a new telephone; when they responded to solicitations by defendants for additional products and services; and when the consumer received ‘courtesy discounts’.”

This is a serious charge indeed. I guess you realize that being locked in a wireless contract without your consent is a problem. You will be forced to commit to that contract for at least two years and you will have to pay a fee to opt out of the contract. But the biggest issue here is the alleged deception and fraud of customers.

Being accused of deceiving customers is costly because the competition in the mobile phone industry is intense. If customers associate Sprint with shady practices and deceptive techniques then they will do business with other wireless networks. However, Sprint has protection from class action suits. The wireless contracts they require customer to sign have statements that guard against class action suits. Sprint Nextel's terms and conditions state that,

We each agree not to pursue arbitration on a classwide basis. We each agree that any arbitration will be solely between you and us (not brought on behalf of or together with another individual's claim). If for any reason any court or arbitrator holds that this restriction is unconscionable or unenforceable, then our agreement to arbitrate doesn't apply and the dispute must be brought in court.

And another wireless contract statement from Sprint also expresses that,

TO THE EXTENT ALLOWED BY LAW, WE EACH WAIVE ANY RIGHT TO PURSUE DISPUTES ON A CLASSWIDE BASIS; THAT IS, TO EITHER JOIN A CLAIM WITH THE CLAIM OF ANY OTHER PERSON OR ENTITY, OR ASSERT A CLAIM IN A REPRESENTATIVE CAPACITY ON BEHALF OF ANYONE ELSE IN ANY LAWSUIT, ARBITRATION OR OTHER PROCEEDING.

These statements clearly indicate that Sprint has anticipated that they might be under sieged from class action suits. The complaints that have signed the contract may be bound to these conditions. However, the law will decide what will happen in the end.

So far, 2008 has not been great for mobile phone networks. Class action suits have been filed against them and they stand to lose a lot if the complainants emerge victorious. Verizon for instance may have to shell out billions in early termination fee refunds. The bad publicity these suits generate can also have negative effects on the networks.

I hope that this complaints will move them into initiating fair business practices and more customer friendly programs.