By: LINDSEY O’NEILL, ESQ.
A California court just ruled that early termination fees for cell phone service contracts are illegal! Thank you!!! With all the technology available today – having to pay hefty fees for terminating your contract has been a big complaint among consumers. Fees in the range of $200 penalties for early termination have been the norm.
Alameda County Superior Court Judge Bonnie Sabraw ruled that Sprint will have to repay millions of dollars to users who paid early termination fees. California consumers sued the telecommunications company for unfair business practices. The underlying California law in the case is California Civil Code section 1671, which basically provides damages must be reasonable when a contract is broken. Sprint tried to argue that the case should be decided by federal authorities, not at the state level. However, Judge Sabraw didn’t agree and found the company liable for violating the statute.
Regardless of the state-law-versus-federal-law arguments, other rulings are likely to follow the California case. Even if Sprint appeals the decision, the federal authorities are also getting on board with the issue. Authorities at the Federal Communications Commission have stated that its goal is to protect consumers – and that early termination fees shouldn’t be abused. The FCC has received thousands of complaints from angry consumer and even been receiving public commentary on the issue. The FCC recommends the following consumer protections with regard to cell phone termination fees:
1. The early termination fee should be reasonably related to the cost of the equipment the consumer receives. For example, a $500 phone shouldn’t have the same early termination fee as a $50 phone.
2. The early termination fee should be prorated over the life of the contract.
3. Any contract for service should be for a reasonable length of time.
4. When a consumer renews his contract without receiving new equipment, the early termination fee should not be extended.
5. Finally, consumers should be able to take the phone home and receive their first bill to make sure the service and bill are consistent with what they expected, before an early termination fee kicks in.
One thing is for sure – consumer action makes a difference! First, we won the battle for wireless phone number portability. Now it looks like we may be winning the battle against early termination fees.
Stay tuned….
Lindsey O'Neill is the Director of Legal Content and Strategic Development at LawInfo.com. Ms. O'Neill is a California licensed attorney based in La Jolla and experienced in a wide variety of legal and business matters.
Does this mean I can terminate my contract and finally get the iphone that I have been wanting for quite sometime now?
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Shannon Reply:
August 4th, 2008 at 11:50 am
Jason, I bought that phone in April. I had Verizon. I HATE AT&T’s service. It is horrible. Verizon will have the iPhone in 2009. I suggest you wait and not spend money on a phone that won’t work half the time because their cell service sucks.
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They are only trying to change this because dumb people dont want to follow through with their contracts THAT THEY SIGNED! KNOWING THERE WAS AN EARLY TERMINATION FEE. How hard is it? No one wants to pay the fee, of course. But when you sign a contract, you sign a contract.
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Shannon Reply:
August 4th, 2008 at 11:52 am
I changed to AT&T in April. They have violated the contract by not providing cell service about 25% of the time. Do they discount me? No. Would they let me out of the contract because of their failure. Hell no! They still wanted me to pay the fee when I wasn’t getting what I am paying $140 per month to get. Now I have some leverage. If they hadn’t abused this, we wouldn’t be talking about this.
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Gigi Reply:
November 8th, 2008 at 11:56 am
Reina,
I don’t agree with you that just because people break their contracts its becase “dumb people dont want to follow through with their contracts.” I think that’s far from the truth. I broke my contract with verizon for many reasons. 1) after comparison their plans are ridicously priced as compared to other carriers 2) nearly impossible to upgrade to a newer, nicer phone without paying an arm and an leg, 3) there were other carriers offering same phones, similiar plans for a way lesser price. A lot of these companies make it almost impossible for costumers to affortably upgrade, change plans..etc. Some individuals like myself like to try new phones annually and if I’m stuck with a 2 year–like i was before–that will drive me to terminate the contract. And realistically, new phones come out every week! I don’t think its fair that I’m stuck with the same fone for 2 years.
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Verizon is trying to nail me with early termination fees for three lines that I cancelled a few weeks back. they have removed two of the three charges due to my diligent and persistent arguments. I called them about 6 weeks ago to find out when I could cancel without incurring fees, but they claim they have no record of that conversation. I will pusue an offer of prorating the fee, since I only had 30 days left. I’ll let you know what happens.
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This is perfect but what about me…I am from New York.
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Well I have T-Mobile and i have 2 lines. My sister just moved to potsdam for school and T-Mobile have no service up there. i told them that i need to cancel this line and they said that since the contract was started in New York (my area) i still have to pay the termination fee. I mean come on she cant even use the phone.
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I have T-Mobile with two lines, one for me and one for daughter. I received a phone at work which they will pay for and my daughter should pay for her phone separately now too. I tried to cancel the service and they said that it will cost $300 to cancel-what is this, I thought is was illegal to charge a cancellation fee in California. T-Mobile said that is a prorated amount and that I renewed service, I did not, just added my daughter last Sept 2008. This is just like being charged a cancellation fee to turn off my water!! Where is the justice?
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I think that its just like health care a giant scam, I also think that the guy on those verizon adds is an ALIEN !!!!
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