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Sprint Nextel Paying Back Termination Fees

frankmeyer
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Posted July 30, 2008 - By Frank Meyer

Sprint Nextel just got ordered to refund $18.25 million to California customers who paid early termination fees to get out of their mobile contracts. A judge is also requiring the company to relinquish $54.75 million in early termination fees it charged that went unpaid by Cali consumers.

It was ruled that the fees, which range as high as $200 per line, were an unlawful penalty under California law and were levied mainly as a way to discourage customers from leaving their contracts.

Of course, Sprint and other carriers claim they charge the fees to subsidize handsets and monthly rates (…and make tons of money after customers bail on their sometimes cruddy service! - FM).

Two weeks ago Verizon agreed to pay $21 million to settle a similar class action suit, which inspired a slew of major wireless carriers -- T-Mobile, Verizon and AT&T -- to pro-rate their early termination fees to avoid or settle similar lawsuits. FYI, a pro-rated fee means a customer pays less to break a contract the longer one continues the contract.

The Federal Communications Commission is mulling over regulating early termination fees on a nationwide basis, yet is also considering whether they should block class action lawsuits like the Sprint case in the future. (WTF?)

Wired.com: Sprint to Pay Back Early Termination Fees

Tags: Tech
Sprint Nextel Paying Back Termination Fees
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