Verizon Opens Wallet to Settle Raft of Early Termination Lawsuits

http://www.ecommercetimes.com/story/...ome=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.


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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.

---

› See More: Verizon Opens Wallet to Settle Raft of Early Termination Lawsuits

On 11 Jul 2008 23:56:48 -0000
[email protected] (Ken) wrote:

> http://www.ecommercetimes.com/story/...ome=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.
>

(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 ****. 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

Dave <[email protected]> wrote in
news:[email protected]:

> Verizon ............................. Bastards.

Very observant....no argument here....(c;

Gordon Burditt wrote:
>> 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,
>
>
>> 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.

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

[email protected] (Gordon Burditt) amazed us all with the following
in news:[email protected]:

>>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.
>
>

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.

On Sat, 12 Jul 2008 19:49:26 -0500, [email protected] (Gordon
Burditt) wrote:

>>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).

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.

Gordon Burditt wrote:
>> 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.
>

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!

On 2008-07-13, Gordon Burditt <[email protected]> wrote:

> 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.


--
Steve Sobol, Victorville, CA PGP:0xE3AE35ED www.SteveSobol.com
Geek-for-hire. Details: http://www.linkedin.com/in/stevesobol

On 2008-07-13, D <[email protected]> wrote:

> 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...

--
Steve Sobol, Victorville, CA PGP:0xE3AE35ED www.SteveSobol.com
Geek-for-hire. Details: http://www.linkedin.com/in/stevesobol

On Sun, 13 Jul 2008 17:12:23 +0000 (UTC), Steve Sobol
<[email protected]> wrote:

>On 2008-07-13, D <[email protected]> wrote:
>
>> 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...

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.