California judge rules early cell phone termination fees illegal

[NYYFAN]

http://tech.yahoo.com/blogs/null/99655

In one of the most significant legal rulings in the tech industry this year, a Superior Court judge in California has ruled that the practice of charging consumers a fee for ending their cell phone contract early is illegal and violates state law.

The preliminary, tentative judgment orders Sprint Nextel to pay customers $18.2 million in reimbursements and, more importantly, orders Sprint to stop trying to collect another $54.7 million from California customers (some 2 million customers total) who have canceled their contracts but refused or failed to pay the termination fee.

While an appeal is inevitable, the ruling could have massive fallout throughout the industry. Without the threat of levying early termination fees, the cellular carriers lose the power that's enabled them to lock customers into contracts for multiple years at a time. And while those contracts can be heinously long, they also let the carriers offer cell phone hardware at reduced (subsidized) prices. AT&T's two-year contract is the only reason the iPhone 3G costs $199. If subsidies vanish, what happens to hardware lock-in? Could an era of expensive, but unlocked, hardware be just around the corner? It's highly probable.

Of course, the carriers aren't going to take this lying down. Early termination fees are seen as critical to business, so carriers are expected to look for ways to reclassify the fees (such as by calling them "rates," part of the arcane set of laws that covers the telecommunications industry). The industry is also pushing for the federal government to step in and claim oversight over the early termination fee issue, which would invalidate any state ruling. The FCC is generally more tolerant of such fees, though

Chairman Kevin Martin has proposed a plan whereby the fees are decreased the closer you are to the end of your contract.

[jlw1980]

I wish this applied everywhere.

[yankeesAZ]

Waiting for T-Mobile to be told they either have to stop charging for spam texts or let me elect to not have texting available on my service.

Currently you cannot call T-mobile and have texting disabled and they will not always remove charges for spam text messages.

Not a very big fan of texting myself and could live without the service.

[PalmerGA]

Once again... doesn't this simply relieve people of a responsibility that they signed a contract to abide by? I have a Blackbery through work, so I didn't have to sign anything but a hand receipt, so I don't know.

Isn't it typical to sign a contract that includes language and terms citing "early termination fees"? Help me out here.

[jlw1980]

Once again... doesn't this simply relieve people of a responsibility that they signed a contract to abide by? I have a Blackbery through work, so I didn't have to sign anything but a hand receipt, so I don't know.

Isn't it typical to sign a contract that includes language and terms citing "early termination fees"? Help me out here.

I signed a 2-year contract with AT&T; it ends in 11/09. Most of my calls are made from home, and the reception in my home is TERRIBLE. My phone drops calls in the middle of important calls ALL THE TIME. I e-mailed them yesterday to tell them I want to cancel because of this; they replied that I'd have to pay the $175 early termination fee. I don't think I should have to pay this when I'm getting terrible service (coverage), as it's no fault of my own. I'm not the type who would try to get out of a contract without a legitimate reason. I'm going to call tomorrow to "discuss" this with them, because it isn't right.

[YankeePride1967]

I signed a 2-year contract with AT&T; it ends in 11/09. Most of my calls are made from home, and the reception in my home is TERRIBLE. My phone drops calls in the middle of important calls ALL THE TIME. I e-mailed them yesterday to tell them I want to cancel because of this; they replied that I'd have to pay the $175 early termination fee. I don't think I should have to pay this when I'm getting terrible service (coverage), as it's no fault of my own. I'm not the type who would try to get out of a contract without a legitimate reason. I'm going to call tomorrow to "discuss" this with them, because it isn't right.

It'll never happen, but one thing the industry could do is give, say a 48 hour period from starting with a company before the contract goes into effect. So for issues dealing with reception at home can be determined.

[JeterRodriguezSheff]

I wish this applied everywhere.

Me too, hopefully this spreads.

[Sam18]

I wish this applied everywhere.

Communist.

[JeterRodriguezSheff]

Once again... doesn't this simply relieve people of a responsibility that they signed a contract to abide by? I have a Blackbery through work, so I didn't have to sign anything but a hand receipt, so I don't know.

Isn't it typical to sign a contract that includes language and terms citing "early termination fees"? Help me out here.

Im not quite sure either, my phone was a gift and was already set up when i got it, i just pay the monthly fee now. My phone is a POS though and gets very poor reception. The only reason I havent changed was because i dont want to deal with the termination fees to NOT USE a product.

[JeterRodriguezSheff]

I signed a 2-year contract with AT&T; it ends in 11/09. Most of my calls are made from home, and the reception in my home is TERRIBLE. My phone drops calls in the middle of important calls ALL THE TIME. I e-mailed them yesterday to tell them I want to cancel because of this; they replied that I'd have to pay the $175 early termination fee. I don't think I should have to pay this when I'm getting terrible service (coverage), as it's no fault of my own. I'm not the type who would try to get out of a contract without a legitimate reason. I'm going to call tomorrow to "discuss" this with them, because it isn't right.

yea pretty much same here, it sucks. I get notices that i missed a phone call or have a voice mail sometime a week after i missed the call. Its ridiculous.

[jlw1980]

Communist.

They're the pinkos, not me!

[RYMASTER or Ryan_Yankees]

They're the pinkos, not me!

Consider yourself blackballed.

[jlw1980]

Consider yourself blackballed.

Why?

[TheYankee]

Once again... doesn't this simply relieve people of a responsibility that they signed a contract to abide by? I have a Blackbery through work, so I didn't have to sign anything but a hand receipt, so I don't know.

Isn't it typical to sign a contract that includes language and terms citing "early termination fees"? Help me out here.

Agreed.

[Sam18]

Consider yourself blackballed.

Hehehehe dirty images.

[YankeePride1967]

Agreed.

In theory I agree, but on the flip side of the responsibility issue, the phone carrier also has a responsibility to provide a powerful enough signal to make sure each customer gets sufficient signal. I think that a contract between a carrier and the consumer should not take place for 48 hours from signing. This way the customer can see if they get reception at home. But for those that have the service (say a 2 year deal), and a year later they want to cancel? No I think they should be liable for a termination fee.

[JeterRodriguezSheff]

Agreed.

So what about Jen and I who get screwed because our phones dont get reception? Either pay for a service that sucks, or pay to not have the service at all?

[TheYankee]

So what about Jen and I who get screwed because our phones dont get reception? Either pay for a service that sucks, or pay to not have the service at all?

Certainly, there should be some type of way around that. The 48 hour period I've seen some suggest seems like a decent idea... I'd be willing to say give new customers a week.

[GreenGrass]

I prefer the way most of the rest of the world do it. You buy an unlocked phone at its true market price. Then you go and find the service provider that best suit you. If you don't like the service, just cancel and give your business to a competing provider while keeping your phone.

Americans must throw away millions of perfectly good phones (and their polluting batteries) every year just because they change service providers.

[JeterRodriguezSheff]

Certainly, there should be some type of way around that. The 48 hour period I've seen some suggest seems like a decent idea... I'd be willing to say give new customers a week.

Seems like a good idea, but as a realistic solution, not one that I think will get much consideration.

[Random]

The other issue is people who move or otherwise need to change their carrier, and the termination fee is more than they would have paid to keep the plan and not use it.

For example, if your bill is $50 a month, and you move to an area they don't service with two month's left, why should they charge you $175 when you cancel? The most they would have gotten if you kept the plan is $100, so why should you have to pay $175?

Yeah you can keep it for two months then cancel, but why should you have to?

[mjdlight]

Certainly, there should be some type of way around that. The 48 hour period I've seen some suggest seems like a decent idea... I'd be willing to say give new customers a week.

But what about situations where service is fine at the time you buy the phone, but months later, it begins to suck? Should the customer be forced to choose between paying a fee or sticking with a carrier who is failing to provide sufficient service?

That is exactly what happened to me with T-Mobile. Luckily I was able to get the termination fee waived by screaming and carrying on enough.

I think at the least, termination fees should be pro-rated. If you cancel with only a few months left, you shouldn't be on the hook for as much money as if you cancel with a year and change left.

[PalmerGA]

While I understand the "lousy service" issue, you have to look at it from the other end. Whomever provides your service probably didn't solicit you... you probably went to them. So, if you buy their product, why should they assume the risk of you deciding to discontinue service?

I do, however, think the 48 hour thing is a good idea - sounds fair to me. You don't like it after trying it for a couple of days, cancel it... no charge at all. On the other hand, it's a contract (an agreement, and obligaion, a responsibility). You entered into it with eyes wide open, changed your mind, you are liable.

One solution - go back to a land-line, especially if you might move. It works beautifully, no long term contract, if you move... just end it and reinstate new service at your ne abode.

[mjdlight]

And again, if service works fine for the first few months and then begins to blow, the provider gets off with nothing and you're still stuck paying the termination fee?

Sounds like they're the ones ducking responsibility, the responsibility of providing the service I contracted with them to provide. Contracts are a two way street.

In any case, T-Mobile agreed with my point of view on this after I bitched enough, and I see that they've changed their termination fee policy since then to be, just as I suggested, pro-rated.

[In Mo I Trust]

While I understand the "lousy service" issue, you have to look at it from the other end. Whomever provides your service probably didn't solicit you... you probably went to them. So, if you buy their product, why should they assume the risk of you deciding to discontinue service?

I do, however, think the 48 hour thing is a good idea - sounds fair to me. You don't like it after trying it for a couple of days, cancel it... no charge at all. On the other hand, it's a contract (an agreement, and obligaion, a responsibility). You entered into it with eyes wide open, changed your mind, you are liable.

One solution - go back to a land-line, especially if you might move. It works beautifully, no long term contract, if you move... just end it and reinstate new service at your ne abode.

I agree for the most part, if you agreed to a contract, and at some point later on you don't like the terms, tough luck, you shouldn't have signed the contract in the first place then.

[JeterRodriguezSheff]

While I understand the "lousy service" issue, you have to look at it from the other end. Whomever provides your service probably didn't solicit you... you probably went to them. So, if you buy their product, why should they assume the risk of you deciding to discontinue service?

I do, however, think the 48 hour thing is a good idea - sounds fair to me. You don't like it after trying it for a couple of days, cancel it... no charge at all. On the other hand, it's a contract (an agreement, and obligaion, a responsibility). You entered into it with eyes wide open, changed your mind, you are liable.

One solution - go back to a land-line, especially if you might move. It works beautifully, no long term contract, if you move... just end it and reinstate new service at your ne abode.

Yes I did enter a contract and i am more than willing to do my part. However they should do their part as well in providing me at least a satisfactory level of service. If they cannot do that the contract should be terminated, plain and simple. Its a two way street.

As for the land-line, I am usually not at home(the issue isnt only in my house), a cell phone is pretty much my only option, for both my career and social needs.

[JeterRodriguezSheff]

I agree for the most part, if you agreed to a contract, and at some point later on you don't like the terms, tough luck, you shouldn't have signed the contract in the first place then.

Its not me disliking the terms, it is their service being very unsatisfactory, wherever I am. I have no problems with the terms, if the service, would you know...work...like they said it would. Its a two way street and they have their responsibility as well.

For all the technology we have, this country finds a good way to make it result in a headache.

[In Mo I Trust]

Its not me disliking the terms, it is their service being very unsatisfactory, wherever I am. I have no problems with the terms, if the service, would you know...work...like they said it would. Its a two way street and they have their responsibility as well.

For all the technology we have, this country finds a good way to make it result in a headache.

If the service isn't up to par that's a legitimate gripe. People in this country in general have no sense of personal responsibility, I'm sure plenty of people want to get out of their contracts so they can drop $800 on an iphone or something like that.

[JeterRodriguezSheff]

If the service isn't up to par that's a legitimate gripe. People in this country in general have no sense of personal responsibility, I'm sure plenty of people want to get out of their contracts so they can drop $800 on an iphone or something like that.

Oh without a doubt, I agree with that. The system needs fixing though.

[yankeeschic12324]

Seems like a good idea, but as a realistic solution, not one that I think will get much consideration.

Actually, AT&T (at the time Cingular) gave us a week to try out the phones/service for free. IF we liked, we kept. 5 years later we're still with them.

[JeterRodriguezSheff]

Actually, AT&T (at the time Cingular) gave us a week to try out the phones/service for free. IF we liked, we kept. 5 years later we're still with them.

damn i wish i had that option. Nobody near me has given me that option.

[yankeeschic12324]

damn i wish i had that option. Nobody near me has given me that option.

We tried Qwest out for a week (Well attempted to) but their phones were lousy so we never bothered. Just sent it all back.

[PalmerGA]

Actually, AT&T (at the time Cingular) gave us a week to try out the phones/service for free. IF we liked, we kept. 5 years later we're still with them.

And that sounds fair... a short "trial period". I also agree that if the service turns to crap after a period of time, there should be ways to bow out gracefully. But people wanting out, just to get out? Nah.

[Random]

We actually did that once. My wife got a new cell phone, and then drove to IL to visit her family and had no reception anywhere in the backwoods hickville town they live in. So when she got back, she was still within the week or two trial (I forget how long it lasted) and she returned the phone and cancelled the plan. No cost, other than a prorated regular bill.

[Tifoso]

This is complete BS. Hate them to death, but they are in the (signed) contract. Enough with the judicial activism.

[NYYDragoon]

This is complete BS. Hate them to death, but they are in the (signed) contract. Enough with the judicial activism.

Err, I wouldn't call this an instance of "judicial activism."