Verizon Wireless to Pay $21 Million for Wireless Contract ETF Settlement

Here's a great update for those who have a score to settle with Verizon Wireless. The nation's largest wireless carrier will pay for a class action lawsuit in California over early termination fees. Verizon Wireless will pay a total of $21 million to the 175,000 members of the class.

Each person in the class-action claim is estimated to receive $87.50 after challenging the carrier's practice of charging a $175 fee for breaking a wireless-service contract early.

The carrier will be made to pay after appeals court in California ruled that the class-action settlement should be upheld.

This Verizon Wireless contract settlement ends all litigation over how early termination fees were applied. However, this should not be applies to its current early termination fee policy. Verizon Wireless has increased ETF from $175 to a pro-rated $350 for "advanced devices" like smartphones and netbooks.

Scott Bursor, the lead attorney for the plaintiffs in the case commented,

"Yesterday's ruling by the Court of Appeal confirms that this is a terrific settlement for Verizon Wireless customers, and now more than 175,000 of those customers will get a substantial refund"

This case was filed in 1999 and centered on a flat $175 ETF.

Tune in for more details on this wireless contract news and update.

Sprint Pro-rated ETF Policy Now Official!

Sprint has finally made it official. In my previous post, I blogged about Sprint's plans to finally pro-rate its ETF or early termination fee. A few days ago, Sprint released an announcement containing the details of its new wireless contract policy on pro-rated ETF or early termination fee.

Sprint's announcement contained the details and benefits that are included in its new contract policy on pro-rated ETF. Sprint's new ETF policy is basically designed to give customers who have signed wireless contracts more freedom. By pro-rating its ETF or early termination fee, Sprint is making it easier for customers to make changes or opt out of their wireless c0ntract.

Sprint's old ETF policy charges customers who want to get out of their contracts a flat early termination fee of $200. The carrier's new wireless contract policy allows subscribers to pay a reduced fee based on how long they have remained faithful to their wireless contract.

Starting on November 2 Sprint subscribers with new or renewed contracts will have a $200 ETF for the first six months. Then Sprints ETF will be reduced by by $10 for the succeeding months that the customer stayed with the wireless contract. The old early termination fee will only apply for customers who want to get out of a wireless contract for the fir six months.

Subscribers who stay faithful to Sprint's wireless contract after six months will have the benefit of paying a reduced early termination fee based on the new pro-rated ETF wireless contract policy. The new Sprint pro-rated ETF policy will charge only $100 for customers who have stayed on a contract for 15 months. The pro-rated early termination fee policy allows a fee of as low as $50.

However, this new Sprint ETF policy does not apply for old wireless contracts that were signed before Nov. 2. Subscribers have signed a Sprint Wireless contract will be under the old ETF policy that demands a flat amount. Old wireless contracts will not benefit from the pro-rated early termination fee of Sprint's new wireless contract policy.

Sprint also announced other initiatives and programs designed to improve the customer experience in their announcement for the new pro-rated ETF policy. These new Sprint programs include one-on-one interaction between subscribers and sales representatives and detailed summaries that explains transactions.

Wireless Contract Update: Sprint to Prorate Early Termination Fee

Here's some great news for all Sprint subscribers. According to an AP article, Sprint is planning to follow other mobile phone carrier's with pro-rated Early Termination Feesor ETF's.

Now ETF's are probably the most controversial aspect of mobile phone contracts because they prevent customers from moving to another carrier before their existing contracts expired. In the past, national and regional US carriers used to charge a flat rate of around $150 to customers who want to get out of a contract before it expired.

Carriers impose this wireless contract policy to recover the cost of subsidized cell phones and to reduce the expense spent on signing up new customers. Of course, subscribers and consumers are no fans of ETF's because it restricts their freedom to move to other carriers and the fee is quite expensive for those who have multiple handsets or phone lines.

Fortunately, many of these carriers have decided to prorate the Early Termination Fees that bind their customers to their existing wireless contracts. And Sprint seems to be on the verge of deciding to prorate its Early Termination Fee. But what is a prorated ETF anyway?

A contract with a prorated ETF will charge a reduced reduce the fee based on each month a subscriber stays with the plan. This means that a subscriber who has stayed with a contract for 14 months will pay less than a customer who wants to opt out of a contract after three months. The less number of months remaining in a contract, the lower the Early Termination Fee.

Sprint's plans to reduce their ETF charges was revealed by CEO Dan Hesse during an an interview. Hesse indicated that the wireless carrier will be able to implement a prorated early termination fee system as early as December.

Sprint CEO Dan Hesse explained that a new billing software should first be put in place before the prorated early termination fee system can operate. Customers will be able to benefit from Once is has the new software in place, it will deduct a small amount of money from the $200 ETF for each month that a subscriber stays with the plan.

I thin that this is a great update. One that many Sprint subscribers have been hoping for and they won't have to wait long. Sprint has been facing a lot of disputes and lawsuits based on ETF and perhaps this decision will provide a solution. Tune in to this blog for more information on wireless contract policies.

AT&T's Prorated ETFs Are Now In Effect

Here's some excellent wireless contract news for AT&T subscribers.

The wireless carrier has formally announced that the change ion their wireless contract policy regarding ETFs or early termination fees has been implemented. Customers who have signed up an agreement or wireless contract with AT&T starting on May 25 will be charged with a prorated early termination fee should they choose to end or terminate their contract or agreement before it expires.

Here's the official press release issued by AT&T:

More Flexibility for Wireless Customers

San Antonio, Texas, March 31, 2008

AT&T (NYSE:T) today announced a new approach to early termination fees (ETFs) that provides greater flexibility for wireless customers.

Beginning on May 25, the company's new and renewing wireless customers who enter into one- or two-year service agreements will no longer be required to pay a single, flat early termination fee. Instead, that fee, which is $175, will be progressively lowered by $5 during each month, every month, for the term of the contract. (The single, flat ETF will continue to apply to new and renewing customers who enter into one- or two-year service agreements prior to May 25.)

The company noted that it continues to offer options for those customers who do not want term commitments or ETFs, including:

* Buy a phone at full price and go on a month-to-month service plan.
* Bring your own compatible GSM device. With this option, you can buy a SIM (subscriber identity module), slip it into the back of the phone, and select a month-to-month service plan.
* Choose one of AT&T's GoPhone prepaid wireless plans.

I know that a lot of customers have been waiting for this to happen. I have read countless of complaints about the high cost of these fees. Early termination fees can be a pain especially if you have signed several contracts. This decision by AT&T should make it easier for customers to shift to a different carrier.

You can tune in to the AT&T News Room for more press releases regarding wireless contract and important announcements.

Break Free from Expensive Wireless Contract Fees

There is no doubt that people spend a lot of money on mobile phone expenses. They spend a significant amount of money on minutes, mobile phones, plans and fees. No one can also deny that this is a business so carriers are also trying to make a profit through the services they provide to customers.

Many experts have observed that making a phone call has become less expensive. A great example of this trend is the unlimited calling plans that have been launched by wireless carriers. For a hundred bucks a month, a subscriber can make unlimited phone calls!

The trend of less expensive calls also indicate that carriers to market data plans. After all, this the the age of the Internet so it's only logical that data plans would become a good source of income for carriers.

Carriers have also turned to text messaging as a goos source of income. Many text messaging providers have installed a series of increase on text messaging rates in the past few months. Text messaging rates in some wireless plans recently increased from 15 cents to 20 cents.

These changes prompted many consumers to explore the option of canceling their wireless contract without paying any termination fee. Many wireless contracts have a clause that allows the subscriber the option of opting out of a contract if a change in fees have a material effect on your service.

However, caution must be applied with using this option. A consumer should examine the policies of a wireless contract before informing the carrier of this decision. Keep in mind that an early termination fee is charged to customers who choose to switch to a different cell phone carrier before the contract expires. Due to consumer complaints, cell phone providers like AT&T have decided to decrease this penalty as the consumer moves closer the end of his or her contract.

To avoid paying for fees attached to carrier switching, some consumers use third party carriers. These sites usually work by matching prospective buyers with cell phone owners with prospective buyers. The site would require a small fee to allow a consumer to post wireless contract terms. The site will then facilitate the transfer opf contracts between a buyer and an owner.

Consumers who want to settle disputes with their carriers may find success by negotiating near end of their wireless contracts. Carriers may give in to your demands if you express that you are thinking about transferring to another carrier if some fees are not reduced or waived. The stiff competition in the mobile phone industry may work in your favor.

Consumers should also exercise caution when they decided to add a new service or make changes to their wireless plans. Carriers may automatically renew your wireless contract if you make changes to your plan or activate new services. Many wireless contract disputes have originated from contracts being renewd without the knowledge of the consumers.

Changes in the Wireless Contract Policies of AT&T

Many mobile phone service providers announced that they will pro rate the early termination fees they charge to customers who want to cancel their wireless contracts. It seems that they are starting to make good on those promises this year. AT&T recently announced that their subscribers will benefit from greater flexibility provided by the company's new approach to early termination fees.

Existing and new AT&T subscribers will not be charged with a flat early termination fee for canceling a service agreement, as long as they signed a one or two year wireless contract beginning on May 25, 2008. They will be charged with a rate that will decrease by "$5 during each month, every month, for the term of the contract."

However, the customers who have signed wireless contracts with AT&T before May 25 will still be charged with a single, flat ETF of $175. Well, I guess these customers will have to finish their contract. These pro rate policy is certainly more customer friendly then the flat rate ETF charged for terminating a wireless contract.

Customers who want no part of any wireless contracts also have new options. If you do not want to tangle with ETF's or other contract policies then you may:

- Choose to briung a compatible GSM device and purchase a SIM (subscriber identity module). You may then slip it into the back of the phone, and select a month-to-month service plan.

- Purchase a handset at full price and choose to go on a month-to-month service plan.

- Sign up for the GoPhone prepaid wireless plans offered by AT&T


The company also announced a few more customer friendly policies. For instance, AT&T now offers a 30-day return policy. This is a no-questions-asked grace period for service and equipment for customers who are unsatisfied with the equipment or service they have purchased.

AT&T Customers will also benefit from street-level coverage maps. They can use this online interactive mapping tool to view AT&T wireless coverage down to a neighborhood street level. This tool can even estimate the likelihood of coverage inside a building or a vehicle and outdoors to help subscribers.

These are just some of the customer friendly policies that have been launched by AT&T. I'm sure that others will follow. I have witnessed a lot of wireless contract complaints so I hope these changes will appease dissatisfied customers. These changes points towards a positive future for relations between wireless carriers and customers. I expect the other carriers to offer similar policies to make their own subscribers happy.

The Wireless Consumer Protection Bill

Massachusetts Representative Edward J. Markey, the chairman of the House Subcommittee on Telecommunications and the Internet has authored a bill that will challenge wireless contracts. According to the bill, legislation is needed because, "wireless service is increasingly used and relied upon by residential and business consumers.”

The Wireless Consumer Protection Bill aims to nullify the need for consumers to sign a mobile phone contract when they pay the full price for handsets. The bill also postulates that customers who purchases a mobile phone at the full price should be able to avail of voice and data services at a rate that is comparable with those offered with subsidized phones.

The bill authored by Markey also has a provision that would mandate prorated early termination fees and force cell phone service providers to only recover device subsidies. A hearing will be held at the The U.S. House of Representatives to discuss this revolutionary bill.

Some experts think that this bill was crafted because of the complications brought about by AT&T and the iPhone. The carrier was criticized for requiring customers to sign a two year wireless contract even though they pay for the full prize of the device and AT&T does not subsidize the hot product.

If the House of Representatives decides to pass this bill and it becomes enacted as law, then the power of wireless contracts will obviously be diminished. The carriers will also be affected because wireless contracts offer discounts that encourage people to buy expensive mobile phones.

According to analysts, this bill may also pave the way to a more open network. For example, a customer may buy a mobile phone from a carrier at full price to avoid being locked by a wireless contract. Then that customer is free to take the device to another carrier provided as long as the device is compatible with the network.

A comment on this Moconews.net article also indicated that AT&T have already been allowing customers to avoid wireless contracts if they pay the full price of the product. According to the comment, the carrier does not advertise this offer and the customer has to ask for this deal. I wasn't able to confirm this but if your an AT&T customer, then it's certainly worth a try.

I guess all we can do is wait for the result of the hearings. If the Wireless Consumer Protection Bill becomes a law, then perhaps consumers can benefit from it. Maybe it can also lessen the wireless contracts complaints and class actions suits directed towards the networks. I hope this piece of info will be helpful to you.

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.

Early Termination Fees of Wireless Phone Contracts

Service industries such as mobile phone phone service and subscription television commonly have termination fees or early termination fees (ETFs) as they are more commonly known. However, the imposition of these fees have been criticized by consumer interest groups. These fees prevent users from migrating to superior services so they are labeled as being anti-competitive.

The process usually works this way. A person purchases cellular phone service from a particular wireless carrier. He or she might be required to sign a two-year contract in order to avail of the service. Now that contract might stipulate a $200 fee in the event that the customer breaks the contract or wants to opt out of it.

The clamor and the disputes about the unfairness of early termination fees in wireless phone contracts have lead to positive changes. Verizon wireless was the first carrier to give in when it announced that it will prorate it's early termination fee. AT&T followed Verizon's lead and other carriers namely, T-Mobile and Sprint, have also decided that they would begin prorating their ETF in the first half of next year.

Now, what does a prorated early termination fee entail? The customer will still have a to pay a fee for ending the contract abruptly. However, the amount will decrease as the decision to end the contract early gets closer to the contract end date. This means that a customer will no longer be forced to pay the original fee if he decides to end the contract.

Here's a list of the current termination fee for each major wireless carrier:

Alltel: $200 per phone line

AT&T: Prorated

Sprint: $200 per phone line (to be prorated next year)

T-Mobile: $200 per phone line (to be prorated next year)

Verizon: Prorated

So far, Alltel has not made any announcements on making it's ETF prorated. However, it may lose customers if it remains as the only carrier to have a non prorated early termination fee next year. It would be logical to assume that the company will also follow the examples of other wireless networks to keep their consumers happy.