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Cellular Phone Forum / General / General Topics / July 2008Verizon Opens Wallet to Settle Raft of Early Termination Lawsuits
http://www.ecommercetimes.com/story/63774.html?welcome=1215820321 By Walaika Haskins CRM Buyer Part of the ECT News Network 07/11/08 12:23 PM PT Verizon has settled multiple lawsuits directed at the company with a $21 million payout. The lawsuits focused on Verizon's early termination fees for wireless users. Other carriers are facing similar lawsuits, and some have changed their policies. BuyDomains is the world's leading marketplace for premium domains with over 800,000 domain names for sale. BuyDomains' domain experts have helped thousands of businesses locate the perfect domain - let us help yours! Verizon Wireless has agreed to a US$21 million payout to settle lawsuits alleging that the wireless carriers' early termination fees (ETFs) were too high and unfair to consumers. While Verizon has not admitted any wrongdoing in the case, the multi-million dollar settlement covers not only a California-based class action lawsuit but a variety of cases pending across the country as well. The decision comes against the backdrop of the recent Federal Communications Commission (FCC) hearings held in June, as the government agency and Congress examine the fees customers must pay when they cancel a wireless phone contract before it expires. The costs can range from $150 to more than $200. The decision also comes as Sprint (NYSE: S) awaits a verdict in a similar case in California. "Ours covers all the similar lawsuits nationally, not just in California. We wanted to put this behind us. Sprint is defending their current ETF practices, while we changed our ETF policy two years ago. So this is irrelevant to today and doesn't have anything to do with the way we handle ETFs today," Jim Gerace, a Verizon Wireless spokesperson, told CRM Buyer. Depends on How You Look At It One's stance on ETFs depends on one's worldview, according to Bill Hughes, an In-Stat analyst. One viewpoint is that "ETFs are just another tool used by evil companies that are looking to exploit the naiveté of consumers caught up in a system that they cannot hope to understand. It is the proper role of the government to protect these simple rubes," he explained. Another viewpoint, he said, sees consumers as logical decision-makers that, while influenced by merchandising techniques such as those provided by wireless operators, are perfectly capable of entering into contracts, and only sub-optimal results can come from governmental interference in abrogating valid commercial contracts for political reasons. In reality, however, most people seem to fall somewhere in between the two, though the first worldview makes for good press, he told CRM Buyer. "It is currently an issue relating to the sub-prime mortgage situation in addition to ETFs," Hughes pointed out. While Hughes acknowledged trending more toward the latter view, FCC Chairman Kevin Martin -- who has affirmed his belief in the fees -- seems to fall more toward the middle. During the hearings in June, the FCC head voiced his concern that ETFs are not being used by wireless operators to offset costs, "but as a means of locking consumers into a service provider." The wireless operators contend, however, that the fees help make up for the subsidies the companies offer customers when they purchase a mobile handset with a standard two-year contract. For example, AT&T (NYSE: T) charges new subscribers with a two-year contract as little as $199 for the new 3G iPhone. Meanwhile, subscribers who refuse to be tied to AT&T for 24 months can purchase the same handset for $599. "The way some [state] government[s] have addressed the merchandising technique of subsidies is to ban them altogether as being anti-competitive. California was one of the governments that had this position. In the early 1990s, wireless operators did not offer subsidies in California," Hughes explained. Most carriers, including Verizon, have altered their ETF policies and implemented the practice of prorating the fees based on the length of time remaining on the contract. "All in all, $21 million to get out of a lawsuit is not that much of a ticket to pay. Perhaps the answer is that all wireless operators will stop having subsidies in California. Still another possibility is that the outcome of the FCC ruling on ETFs could make the California laws moot," Hughes concluded, though he said the latter outcome was doubtful. > http://www.ecommercetimes.com/story/63774.html?welcome=1215820321 > [quoted text clipped - 7 lines] > termination fees for wireless users. Other carriers are facing > similar lawsuits, and some have changed their policies. (snip) > Most carriers, including Verizon, have altered their ETF policies and > implemented the practice of prorating the fees based on the length of > time remaining on the contract. (snip) If verizon is doing that, it must be a recent development. A couple years ago, we cancelled a Verizon 2-year contract at 2 years PLUS ONE DAY, and Verizon wanted to charge us $175 X 2 for an ETF. Bastards. They've lost us for life for that sh.t. And no, we didn't pay it. The fact that they would TRY to charge us an enormous ETF beyond the end of our contract is what pissed us off. Severely. -Dave > Verizon ............................. Bastards. Very observant....no argument here....(c; >> Most carriers, including Verizon, have altered their ETF policies and >> implemented the practice of prorating the fees based on the length of >> time remaining on the contract. > >If verizon is doing that, it must be a recent development. Indeed - and about goddanm time, too. Not only do those rapacious f.ckers renew your "contract" but they charged you the full ETF even if you cancel ONE DAY early. >A couple >years ago, we cancelled a Verizon 2-year contract at 2 years PLUS ONE >DAY, and Verizon wanted to charge us $175 X 2 for an ETF. Bastards. >They've lost us for life for that sh.t. Same here. In my case, although the "2-year contract" period was over by several months, Verizno claimed I had "extended" my contract by another year by changing my calling plan (we moved from AZ to CA and my wife wanted a local phone number). We did NOT buy any new (subsidized) hardware, nor did our rate plan change, so what "costs" does Verizon need to recover from us that would justify extending our contract? Of course, the droid at the Verizon store never mentioned it, and I don't recall signing any sort of agreement to extend my contract period by an additional year. How can it be a real contract if a) you didn't sign the updated agreement, and b) there was no "meeting of the minds" when they "extended" the term of your commitment because you made some innocuous change to your account? Of course, even if this "contract" doesn't hold up in court, it would cost you a lot more than $175 to litigate it - which is precisely what Verizon is counting on. f.ck Verizon - I will never do business with them again EVER. >>> Most carriers, including Verizon, have altered their ETF policies and >>> implemented the practice of prorating the fees based on the length of [quoted text clipped - 30 lines] > > f.ck Verizon - I will never do business with them again EVER. Last September I increased my family share plan minutes from 700 to 1400, and in doing this , they reset my contract two years on all five phones of my plan. Most folks believe that I can fight this, but in the area that I live, Verizon simply has the best coverage. Aside from their lousy attitude, they work well for me. > Not only do those rapacious f.ckers renew your "contract" but they > charged you the full ETF even if you cancel ONE DAY early. I rode it out in 2004 when I had network problems and they refused to do anything about them. Bought a Sprint phone and started using it, along with my Sprint-assigned number, about six weeks before end of contract; then I ported my number *AFTER* my contract was up. What you're describing IS their stated policy, and you can take it or leave it (i.e. you don't have to use them). I get irritated at people who sign or verbally agree to a contract and then get all pissy when the person or company on the other end holds them to the contract. Yes, Scott, that means you. :) But what is this about renewing the contract? They're not supposed to do that automatically. In fact, when I moved from Ohio to California, I *needed* to set up a new account because different regions of the US are, or at least were, handled by different operating divisions of VZW. I called the E-Z Move department, and they took care of me. The ETF on the Ohio account was credited back to me (it gets billed automatically). The activation fee on the Cali account was also credited (it also gets billed automatically). And I kept the same end date. VZW does suck, but it sounds like something got badly screwed up in this case.  SignatureSteve Sobol, Victorville, CA PGP:0xE3AE35ED www.SteveSobol.com Geek-for-hire. Details: http://www.linkedin.com/in/stevesobol >> Not only do those rapacious f.ckers renew your "contract" but they >> charged you the full ETF even if you cancel ONE DAY early. > >What you're describing IS their stated policy If extending your contract without your express agreement is their stated policy, they certainly didn't state it very loudly when I first signed on with them. >I get irritated at people who sign >or verbally agree to a contract and then get all pissy when the person or >company on the other end holds them to the contract. Yes, Scott, that means >you. :) Be irritated all you like. Verizon still blows dead bears and I'm going to tell everyone who will listen about my experience. >But what is this about renewing the contract? They're not supposed to do >that automatically. Do I have your permission to be irritated about that? :) >VZW does suck, but it sounds like something got badly screwed up in this >case. It seems we agree more than we disagree. > If extending your contract without your express agreement is their > stated policy, they certainly didn't state it very loudly when I first [quoted text clipped - 7 lines] > Be irritated all you like. Verizon still blows dead bears and I'm > going to tell everyone who will listen about my experience. I was referring to your complaint that they charge you the full ETF if you're even ONE DAY shy of your contract end date. They are completely within their rights to do so. OF COURSE I'm not arguing they should be allowed to extend your contract just because you looked at them funny. > It seems we agree more than we disagree. Yes. I was only arguing against the first complaint. SignatureSteve Sobol, Victorville, CA PGP:0xE3AE35ED www.SteveSobol.com Geek-for-hire. Details: http://www.linkedin.com/in/stevesobol >Same here. In my case, although the "2-year contract" period was over >by several months, Verizno claimed I had "extended" my contract by [quoted text clipped - 5 lines] >it, and I don't recall signing any sort of agreement to extend my >contract period by an additional year. Wonder if that droid got commission or bonus for coding your transaction as a contract extension. m >>Same here. In my case, although the "2-year contract" period was over >>by several months, Verizno claimed I had "extended" my contract by [quoted text clipped - 8 lines] >Wonder if that droid got commission or bonus for coding your transaction >as a contract extension. I'm a forner VZW employee. Sales reps are compensated for activations, contract extensions, as well as data packages. During one retail data competition, 3 retail sales reps slammed over 200 customers with data packages on a Saturday morning. When they were caught, all fhree of them had to report to HR at the regional office. We were certain that these three were going to be terminated due to the scope of the slamming. Guess what? Not one of them was terminated! None of us who knew about the slamming could believe it! We weren't sure if the three received a verbal or written warning. VZW employees who slam customers should be fired! This thread points out something that many don't seem to understand. When you are buying a service, any type service, and you ask that the service be changed, that's a change in the contract. In many cases, besides cell phone service, & in all cases when it's cell phone service, you need to read the papers you are signing for the changes and know everything you have signed. If doing the change on line, your best bet is to record the conversation & ask specificately if it changes your contract dates. I have a cell phone contract that was signed for 1 year. That was 7 years ago. When I view my account on line, it says my contract expiration date is Janurary 14, 2002. I haven't change anything & will not, because I can't get the same rates on current plans from anyone. Tom J >This thread points out something that many don't seem to understand. >When you are buying a service, any type service, and you ask that the >service be changed, that's a change in the contract. In many cases, A change in the contract, in and of itself, does not necessarily restart it. And there are some changes I sincerely hope DON'T restart the contract, like changing your billing address or credit card number, calling to ask your balance, making a phone call (even if it's a premium call that will be billed extra). >besides cell phone service, & in all cases when it's cell phone >service, you need to read the papers you are signing for the changes >and know everything you have signed. Often, that's a standard credit card slip. And nothing else. And if you ask for a copy of the contract you get blank stares over the phone. >If doing the change on line, your >best bet is to record the conversation & ask specificately if it >changes your contract dates. Chances are they will not know what you are talking about, so they will guess. For some cell phone companies, who try to charge ETF if you are early or late in cancelling, and only allow a narrow window (e.g. one hour (lunch hour)) to call, the best bet may be to get a third party that THEY involve who will know of your request. Although I can't recommend this, police bomb disposal units or SWAT teams WILL remember your disconnection request if they get called because of it. >I have a cell phone contract that was signed for 1 year. That was 7 >years ago. When I view my account on line, it says my contract >expiration date is Janurary 14, 2002. I haven't change anything & >will not, because I can't get the same rates on current plans from >anyone. Most cell phone companies don't allow that. You MUST renew your contract after it expires or you won't get any service. There's no going "month-to-month" like in renting apartments. >> This thread points out something that many don't seem to >> understand. [quoted text clipped - 11 lines] > contract after it expires or you won't get any service. There's > no going "month-to-month" like in renting apartments. The difference is, I know what my contract terms are!! The plan I bought and still have is a Verizon Single Rate North America Plan. The reason it's still honored is the clause in the contract that states "Under this contract you will have 2000 free weekend minutes for life, from 7:00 PM Friday to 7:00 AM Monday". That statement alone keeps the contract in force as long as I don't change my plan. I also have never had a roaming charge anywhere in North America because of the single rate. Like I said, read your contract and know what it says. I like Verizon's service & terms!! Tom J >>This thread points out something that many don't seem to understand. >>When you are buying a service, any type service, and you ask that the [quoted text clipped - 38 lines] > contract after it expires or you won't get any service. There's > no going "month-to-month" like in renting apartments. That is absolutely false. Every cell phone company I can think of allows for the continuation of service with no additional contract required. So, please provide the names of the providers that will cancel service for no contract. >>I have a cell phone contract that was signed for 1 year. That was 7 >>years ago. When I view my account on line, it says my contract [quoted text clipped - 5 lines] > contract after it expires or you won't get any service. There's > no going "month-to-month" like in renting apartments. What cell companies do that? Every cell company I've ever used (most recently, T-Mobile and Cingular) do NOT renew your contract unless you buy subsodized hardware, or sign up for certain "promotional" rate plans. My current T-Mobile service contract ended in February (I added a new line on a promotional Family plan in February 2007) and I've been month-to-month ever since. >> Most cell phone companies don't allow that. You MUST renew your >> contract after it expires or you won't get any service. There's >> no going "month-to-month" like in renting apartments. Totally incorrect...once your contract expires, you automatically go month to month. > What cell companies do that? Every cell company I've ever used (most > recently, T-Mobile and Cingular) do NOT renew your contract unless you > buy subsodized hardware, or sign up for certain "promotional" rate > plans. Anecdotal complaints about Sprint say they will renew your contract for an insignificant change to your plan, some have seen their contract extended after simply calling customer service. Someone in the Sprint NG reported he called ABOUT a change and specifically asked if it would renew his contract and was specifically told it would not, but he found out a month later it was indeed extended. In my case, I was out of my contract for a year and it was renewed for simply changing my number to a different area code. I could have asked for a new phone if it meant a contract extension, but I already had a new model that replaced my older model damaged one (they no longer carried my old model) and I intened to stay with Sprint for several more years anyway. >>> Most cell phone companies don't allow that. You MUST renew your >>> contract after it expires or you won't get any service. There's [quoted text clipped - 20 lines] > carried my old model) and I intened to stay with Sprint for several more > years anyway. The first cell phones I got were with Sprint. The service in my area was pretty poor, and I couldn't get service at my home. I use to stop at a variety of locations to make calls and pick up my messages. Two years later I got two new phones and renewed my contract and then discovered that Verizon phones worked all over my area, including at my home. I called Sprint to see if I could cancel and not pay an ETF because of the poor coverage in my area. I'm sure it has a lot to do with the particular people I spoke to, but they were the nicest folks to deal with and allowed me to cancel with no hassle and no ETF >>>> Most cell phone companies don't allow that. You MUST renew your >>>> contract after it expires or you won't get any service. There's [quoted text clipped - 31 lines] > with the particular people I spoke to, but they were the nicest folks > to deal with and allowed me to cancel with no hassle and no ETF Legally they had no choice when they couldnt provide a service where you needed that. The why I view tihs is that contracts make sense to help cover the subsidy, however, as the industry evolved, having the ETF prorated is the most fair and logical approach. In addition, even if the contract denotes that they will extend/renew your contract if you make a plan change, as a courtesy they should always remind you of that before making any change. I don't know that the lawsuit is warranted, but I do think that proration of the EFT is the right move going forward. In my experience, I've always been able to "argue" with them to negotiate the EFT, or other fees, as needed. All in all, going forward this should be less of a concern, and if you want full freedom from contracts, prepaid is the best way to go. And with great services and more and more competitive pricing, postpaid is losing its appeal. At this point in the game, the only benefit to postpaid is the subsidy on the handset that doesn't work for the prepaid model...b/c there's not committment/contract. Cheers, PrepaidWirelessGuy www.prepaid-wireless-guide.com > At > this point in the game, the only benefit to postpaid is the subsidy on > the handset that doesn't work for the prepaid model...b/c there's not > committment/contract. Don't kid yourself- prepaid handsets are subsidized as well- just not to the same extent. Those $15-20 retail Tracfone and GoPhone handsets wholesale around $50-60. > > At > > this point in the game, the only benefit to postpaid is the subsidy on [quoted text clipped - 4 lines] > the same extent. Those $15-20 retail Tracfone and GoPhone handsets > wholesale around $50-60. Not to mention that WallyWorld isn't selling them out of the kindness of their heart. SignatureKeith Yup. Good discussion. I wasn't trying to say that all prepaid phones aren't subsidized, or that there isn't dealer/channel comp. But prepaid carriers are trying to move to unsubsidized phones for their largest volume handsets, and even making some money on them. Other, smaller MVNOs are selling refurbs. The main point is that if a customer finds the same phone on postpaid as prepaid, the postpaid phone, with a 2 year contract, will almost always come in much cheaper for them. Cheers, PrepaidWirelessGuy www.prepaid-wireless-guide.com >>> Most cell phone companies don't allow that. You MUST renew your >>> contract after it expires or you won't get any service. There's [quoted text clipped - 14 lines] > renew his contract and was specifically told it would not, but he found > out a month later it was indeed extended. And that has NOTHING to do with what was posted. The poster claimed that " Most cell phone companies don't allow that. You MUST renew your contract after it expires or you won't get any service. There's no going "month-to- month" like in renting apartments." So again I ask- specifically which carriers do this? >>> Most cell phone companies don't allow that. You MUST renew your >>> contract after it expires or you won't get any service. There's [quoted text clipped - 14 lines] >renew his contract and was specifically told it would not, but he found >out a month later it was indeed extended. A Cingular droid did this to me when I added a phone to my family plan. I supplied my own phone (which I already owned free and clear - no subsidy) and did not change my rate plan; I merely added a third line for an extra $10/month. I have been month-to-month with Cingular since day one (and, after my experience with Verizon, I was determined to keep it that way), so it was quite a shock to log onto my account a few days later and discover that there was suddenly a 1-year contract listed. Of course I immediately called Cingular about it. It turns out that the droid at the Cingular store initially submitted my paperwork correctly (i.e. no contract), but then CALLED BACK a couple of hours later to explicitly ADD a contract extensiion (and a commission for himself). In other words, this was no accident - he DELIBERATELY added the contract AFTER I left the store in order to line his own pockets. Cingular immediately removed the contract BS from my account. I never heard if they fired the droid, but he bloody well deserved it. Thinking back, it may well have been something like this that caused my contract extension at Verizon. Only Verizon never bothered to check whether the contract extension was legitimate, they simply enforced it and took "their" money. Clearly a big part of the problem is a compensation structure that rewards fraud. If a droid working in a cellular phone store can simply phone in to the main office and say "add a contract to this guy's account" with no checks or balances, then something is seriously wrong with the way these companies do business. Perhaps the cellular companies turn a blind eye to this activity, since it benefits them, as well - the droid gets a commission, the company (potentially) gets an ETF, and unless the customer is paying attention he doesn't even notice he's been raped (until he goes to cancel his service, of course). >>This thread points out something that many don't seem to understand. >>When you are buying a service, any type service, and you ask that the [quoted text clipped - 5 lines] >credit card number, calling to ask your balance, making a phone call >(even if it's a premium call that will be billed extra). Here is the way the cell phone company looked at it: This is not a statement that I agree with it, only that this is how it is looked at. You have a contract begining a set date for a set amount of minutes at a set rate for a set period of time. If you don't want to fulfill the terms contract, you have two options: a) Exchange that contract for a new contract, with a new set number of minutes, set amount, set term limit. b) Buy out of the contract for a set fee. About a year or so ago, VZW changed the options a little. You can now change the set mintues and set charge, without changing the set period of time. In effect they now allow you to modify the terms of the original contract, instead of making you void the old one, and start a new one. They also changed the buy-out clause so it costs you a little less to buy out of it each month. Also remember, no one forced you to sign the contract. You chose to. Just like some homeowner's associations. No one forced you to buy that house, and you knew you would have to join the association when you bought. It is not realistic to complain that they want you to have a certain type of fence or mailbox. That is what you were agreeing to when you bought the house. if you didn't look to see what they would want you to do, that is your fault. > About a year or so ago, VZW changed the options a little. > > You can now change the set mintues and set charge, without changing > the set period of time. In effect they now allow you to modify the > terms of the original contract, instead of making you void the old > one, and start a new one. Ha. Anyone remember Verizon's Worry Free Guarantee? You were allowed to do a lot of stuff without extending your contract. They must have changed their minds, and then changed their minds BACK recently... SignatureSteve Sobol, Victorville, CA PGP:0xE3AE35ED www.SteveSobol.com Geek-for-hire. Details: http://www.linkedin.com/in/stevesobol >> About a year or so ago, VZW changed the options a little. >> [quoted text clipped - 6 lines] >a lot of stuff without extending your contract. They must have changed their >minds, and then changed their minds BACK recently... You were actually able to change anything as long as there was at least a year left in your contract without renewing. It would only change your contract if you had less than a year to go. The old price plans came in one or two year varieties. and if you were only doing a price plan change, the rep should select the one year codes and you would have one year as minimum. They would still void out the original terms, and replace them with a "original time left or one year, what ever is more" time frame. Furthermore, any changes within 30 days would not reset your contract. you could (and many did) change your price plan every month and avoid a contract extension at all. >> This thread points out something that many don't seem to understand. >> When you are buying a service, any type service, and you ask that the [quoted text clipped - 38 lines] > contract after it expires or you won't get any service. There's > no going "month-to-month" like in renting apartments. If so, it's something relatively new! My former cell phone was purchased five or six years ago. When the two year contract expired, someone called and asked me to renew. I said "no thanks" and that was the end of it. I had service without a contract for three-four years until I decided it was time for a new phone. When the current contract expires, I will go "month-to-month" again unless they make me an offer I can't refuse! > For some cell phone companies, who try to charge ETF if you are > early or late in cancelling Who charges an ETF for being late? "E" stands for "Early." I've never heard of anyone charging the ETF for cancelling late. Let me know who they are so I can avoid doing business with them. > Most cell phone companies don't allow that. You MUST renew your > contract after it expires or you won't get any service. There's > no going "month-to-month" like in renting apartments. What? You're absolutely, completely wrong. I've used Verizon, Sprint, and now T- Mobile, and used GTE in the mid-90's and with ALL of those carriers, you go month-to-month automatically after end-of-contract. Do you realize how stupid it would be for a carrier to just shut you off, ONLY because you did not renew your contract? Do you have any clue how many millions of dollars the carrier would lose from pissed-off customers churning? Stop spreading misinformation. SignatureSteve Sobol, Victorville, CA PGP:0xE3AE35ED www.SteveSobol.com Geek-for-hire. Details: http://www.linkedin.com/in/stevesobol |
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