Aurion
11.07.08, 16:25
Verizon Wireless agreed to pay $21 million to settle a lawsuit filed by customers who claim the company's early termination fees are excessive and unfair.
Details of the settlement aren't public. But a Verizon spokeswoman said that the settlement will put to rest claims filed by customers in California as well as customers who are part of a nationwide class action lawsuit.
Verizon denied any wrongdoing. And the spokeswoman pointed out that Verizon Wireless was the first cell phone operator in the U.S. to establish a pro-rated early termination fee that decreases over the time of the contract. Since then, the other three carriers, AT&T, Sprint Nextel and T-Mobile, have all pledged to go to prorated fees.
The settlement comes as these cell phone operators take heat from the Federal Communications Commission and Congress over the fees. The FCC held a hearing in June in which unhappy customers and consumer advocates railed against the companies for their business practices.
FCC Chairman Kevin Martin said he believed the fees, which in some cases have exceeded $200, were excessive. And he said he was concerned the early termination fees were not being used as a means to recover legitimate costs, but rather as a means to lock customers into a service provider.
The phone companies have argued that the fees are necessary to recover costs. Specifically, they say the early termination fees help cover the cost of phones, which the carriers subsidize and offer as part of a service contract.
Source :
Verizon Wireless settles early-termination suit | News - Wireless - CNET News.com (http://news.cnet.com/8301-1035_3-9988579-94.html?hhTest=1&tag=nefd.top)
Details of the settlement aren't public. But a Verizon spokeswoman said that the settlement will put to rest claims filed by customers in California as well as customers who are part of a nationwide class action lawsuit.
Verizon denied any wrongdoing. And the spokeswoman pointed out that Verizon Wireless was the first cell phone operator in the U.S. to establish a pro-rated early termination fee that decreases over the time of the contract. Since then, the other three carriers, AT&T, Sprint Nextel and T-Mobile, have all pledged to go to prorated fees.
The settlement comes as these cell phone operators take heat from the Federal Communications Commission and Congress over the fees. The FCC held a hearing in June in which unhappy customers and consumer advocates railed against the companies for their business practices.
FCC Chairman Kevin Martin said he believed the fees, which in some cases have exceeded $200, were excessive. And he said he was concerned the early termination fees were not being used as a means to recover legitimate costs, but rather as a means to lock customers into a service provider.
The phone companies have argued that the fees are necessary to recover costs. Specifically, they say the early termination fees help cover the cost of phones, which the carriers subsidize and offer as part of a service contract.
Source :
Verizon Wireless settles early-termination suit | News - Wireless - CNET News.com (http://news.cnet.com/8301-1035_3-9988579-94.html?hhTest=1&tag=nefd.top)