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Settlement comes without any admission of wrong doing from Verizon

There are often many things that cellular phone customers take issue with from their respective providers. One common complaint from customers at many different providers is that the fees charged for early termination of a contract are excessive.

Even Kevin Martin, chairman of the FCC believes the fees are often excessive. According to News.com, Martin says he believes that the fees are not being used to recover real costs when contracts are ended early at the user’s request, but are being used to keep customers locked to one provider.

Several of the major cellular providers have faced class action suits from customers over early termination fees. Verizon has been fighting a class action suit filed against it in California in 2006. The suit was originally filed against several major cellular providers including Verizon, AT&T, Sprint Nextel, and T-Mobile.

The courts split the suit apart so each provider could face the charges on their own. Verizon has now agreed to settle the class action by paying $21 million without admitting any wrong doing on its part. Verizon also noted that it was one of the first providers to establish a pro-rated early termination fee which decreases over time.

The FCC held open public hearings in June on the subject of early termination fees and is considering getting into the topic itself. News.com says that Sprint Nextel won its class action suit with the courts finding that its customers owed it $225 million.

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What!?
By Polynikes on 7/14/2008 10:27:55 PM , Rating: 1
quote:
News.com says that Sprint Nextel won its class action suit with the courts finding that its customers owed it $225 million.

How the hell is that even possible?




RE: What!?
By Smartless on 7/14/2008 10:56:51 PM , Rating: 2
Yeah especially coming from a company ranked near the top for WORST customer service.
http://articles.moneycentral.msn.com/SavingandDebt...

Not that this article and customer service are the same thing but my fiancee just went through hell after resigning and them giving her a whole lot of grief with contract charges that didn't exist. Maybe that $225 million was supposed to be a negative number. :P


RE: What!?
By FITCamaro on 7/15/2008 7:33:31 AM , Rating: 2
No Sprint has long had a problem with customers not paying bills.


RE: What!?
By seamonkey79 on 7/15/2008 8:53:07 AM , Rating: 2
No, Sprint has long had a problem with screwing up customers bills and said customers not paying the bill until things are straightened out and after two months on the phone with Sprint, Sprint cuts you off because you haven't paid the bill, even though when you were talking to them they said that they would get it straightened out and you wouldn't be cut off until it was taken care of, we value your...

Whatever.


RE: What!?
By ice456789 on 7/15/2008 10:24:44 AM , Rating: 3
As a former employee of Sprint working on the phones in customer service, I can indeed tell you that Sprint's customer service sucks. Don't blame it on the person that you're talking to though, they're just trying to keep their job. During training they were taught quite enthusiastically that every dollar that is given to a customer is a dollar less that they pay YOU. Their goal is to make customer service reps feel as if they're digging out of their own pockets to give a customer an adjustment. Their bonuses and raises are highly dependent on the amount of adjustments they do. And the limit is something like $1.50 per customer. That sounds like plenty, but if they talk to 100 customers per day and just two of them have been charged early termination fees in error, they are already DOUBLE their limit. This kills their pay and also gets them in trouble, even if it's not their fault.

Secondly, the focus in the customer service area is SALES, not customer service. On each and every call, you must try to sell something to the customer. And your pay is very highly tied to how much you sell. This leads to 'spamming'. That's when you don't even discuss something with a customer, but you throw it on their account anyway. So if you call in asking why you've been charged a late fee you might find that you've been signed up for a vision plan on your next bill. I would say about 30% of the issues we encountered were actually caused by other customer service reps apathy or greed.

Surprisingly, whether or not you resolve the customer's issue does not affect your paycheck. While Sprint's customer service problem is partially caused by bad reps, most of the problems are caused by Sprint's own practices. I was shocked when I called into Verizon about my bill when I was offered no sales pitch, no scripted garbage, and nothing mysterious showed up on my bill afterward. The person on the other end of the phone wanted to solve my problem as quickly as possible and get me off the phone, and those were my goals for the call too. Until Sprint realizes this they will still have a customer service problem.


RE: What!?
By seamonkey79 on 7/16/2008 8:49:16 AM , Rating: 2
My sister sells Sprint phones. When she talks to anybody about the phones, she tries to sell this that and everything else with it. My sister, talking to me, tried to get me on some nearly $150 a month plan, all the while being unable to get my parents/other sister's phone plan working out, so they have a bill that three months ago was around $100 a month that suddenly shot up to $275 a month, even though they'd never talked to anyone at Sprint. After talking to people at Sprint, however, it suddenly shot up another $25 a month. After having been promised it would be back to where it should be.

I walked into the Verizon store, told them what I wanted, and about 30 minutes later (my number was on another plan and there was some difficulty getting the computer to release it to my new plan), I walked out. I just paid my first bill on that plan, and it is exactly what I was told it would be.

By the way, it is possible to walk in, buy the phone and not sign a contract. I did it... walked in, paid $400 for my LG Voyager, and signed up for service sans 2-year or even 1-year contract.

Also, with Verizon, you can make changes to your plan, on their website, without re-upping your contract. I'm wondering why the FCC thinks that Verizon, basically giving you a phone, or taking a $200 hit (the LG Voyager cost me $400, with a 2-year would run $200) on a number of phones, and then, if you terminate early, charging you for that initial hit is outside the realms of propriety.

The government belongs not in business.


RE: What!?
By crimson117 on 7/15/2008 11:08:18 AM , Rating: 2
And why would the author reference a News.com article but not actually link to it?

WTB an editor for DailyTech.


The easy solution
By ice456789 on 7/15/2008 10:41:54 AM , Rating: 2
Is for carriers to stop selling phones. I don't get my TV from the cable company. I don't get my house phone from the phone company. Why do I have to get my cell phone from the cell phone service provider? And then they charge early termination fees to 'recoup the costs'. How about you just let people buy unlocked phones at any store, and you charge them monthly for service. That way if the customer's phone breaks it's not your problem. If your TV breaks and it takes 2 weeks to fix, do you call your cable company and ask for credit for those 2 weeks? The cost of repairing and servicing phones should be covered by the manufacturers of the phone, not the company that provides the service. In my experience as a customer service rep, approx 25% of the calls that came in were phone issues of some sort. I'm sure it's even more in a brick and mortar store.

The reason they don't do this is exactly what the gov't is claiming.... they are trying to lock customers in. They don't want you buying an unlocked phone and switching providers every month until you find one you like. That kind of competition would truly allow the best providers to grow but would change the market completely. Sprint and At&t would have the most to lose. IMO Verizon and T-mobile would profit (one being the best carrier, the other being a low cost alternative). But they fear a truly open market. It would mean a total change in the way they do business.




By ajfink on 7/14/2008 11:13:40 PM , Rating: 2
The government has its hand in most things economic these days.


By masher2 (blog) on 7/15/2008 12:09:56 AM , Rating: 2
Hear, hear. If you agree to a contract with an early termination fee, then you agreed to the amount of that fee. If you don't like the amount, find a different company, or buy a phone outright, and skip the fee entirely.

Between our paternalistic government and excessive legal action, its a wonder anyone can get anything done in this country any more.


By phatboye on 7/15/2008 1:04:21 AM , Rating: 1
What is the early termination fee like $199? That's not excessive at all, especially. if you consider the fact that they subsidized the cost of your phone.

Would be nice those if Verizon allow me to buy my own phone and avoid the early termination fee altogether.


By InternetGeek on 7/15/2008 1:16:45 AM , Rating: 2
I think it depends on the phone you got. I bought a phone under a contract from Optus (Australia) and wanted to get out of the contract early because the money really wasn't worth given how much I use the phone (90-95% of the time goes unused... literally months could go by and I wouldn't even open the phone at all). The termination fee was $430 (almost 1:1 with the US dollar these days) which is close to the value of the phone as if it was new. And I believe the phone is locked to their network.


By Mitch101 on 7/15/2008 11:24:07 AM , Rating: 2
Got to agree 99% of those phones arent costing the phone company $199.00 and a 2 year contract to recoup the costs.

If that were true I couldn't get a FREE NEW phone on a pre-paid system that I never have to buy another minute for.

We need to put an end to all 1-2 year contract phone systems to generate some competition and respect from the phone companies. Verizon was never nice to me until I called to cancel the phone service then they were my best friend.

Imagine is more people opened up their wifi routers for VOIP hotspot drops. Hmmmm.


By Ryanman on 7/15/2008 1:57:29 AM , Rating: 4
too bad there are no phone companies that offer fair contracts.

Don't get me wrong, I hate the govt. stepping in on this, but American cell carriers have monopolies on service structures. They all got together and agreed to use these unfair agreements.

It's the same thing with internet access. Every Area has ONE company. Even though you know service is going to suck and outages will happen regularly, what choice do you have if you surf the web and game regularly? Without enough competition, it IS the Govt.'s job to jump in and fix things on a temporary basis, as much as it pains me to say so.

God knows they've done enough by making them immune to lawsuits from wiretapping though.


By Ryanman on 7/15/2008 10:18:08 PM , Rating: 2
Call it a big coincidence, but all the cell phone carriers using the EXACT same text messaging rates and having the EXACT same termination fee structure is a little suspicious.

I'm not saying we're not liable for the fee, I'm saying there simply aren't any options for a lot of people otherwise. A cell phone is a necessity. This article briefly mentions a couple carriers who lower termination fees, but it's still not even CLOSE to the majority. A lot of people simply can't afford to buy their own phone, and even if they did, draconian hardware locking will stop a lot of people who CAN afford to buy it in their tracks.

As I said to masher, I think that a company who put out this sort of option where the subsidy decreases to 0 before the contract ends would make a killing. There's choice, you say, but really there's barely double digit numbers of carriers to choose from, and all of them have poor customer service at best : /


By sxr7171 on 7/17/2008 12:48:39 AM , Rating: 2
A cell phone may be a necessity today, I'll give you that but don't ever tell me that people can't afford to buy a phone.

If a cell phone is so a necessity then what's wrong with the $40 unlocked Nokia 1110 or Sony Ericsson J210?

What you're saying is that people can't afford the phones they want. They all want these iPhones and PDA phones and what not.

Also if you spent $200 on a Nokia 5310 Xpressmusic Unlocked you would get a music player along for the ride. That's not so expensive considering the functionality. So if you get it for free with 2 year contract you have a free phone and MP3 player. Carriers are not in the business of giving away MP3 players, so they need to have contracts for people who want "free" equipment.

If people chose to buy their own phones and start service without a contract they wouldn't be so deprived of this modern necessity.


By masher2 (blog) on 7/15/2008 9:39:53 AM , Rating: 1
> "too bad there are no phone companies that offer fair contracts."

Why not start one yourself if you really believe that? If you're the only "fair" provider, people will flock to you in droves, and you'll soon wind up richer than Croesus.

> "It's the same thing with internet access. Every Area has ONE company"

Really? My area offers Cable, DSL, and satellite for broadband option, as well as many firms still providing dial-up.


By Ryanman on 7/15/2008 10:10:03 PM , Rating: 2
if I had the capital, trust me, I would. A company that charged fair prices for texting and service, and gave you the option to buy your phone outright would make a killing (even with the low margins involved)

As for the internet service, the VAST majority of the US has exactly ONE provider for each type of service. We have Direct TV, Charter, AT&T, and so on, but there's no duplicate output for each service. As Fit said, it's the government's fault for THAT particular monopoly.


By hotel77 on 7/15/2008 2:25:12 AM , Rating: 2
I understand what you're saying. However certain mobile carriers *require* that you get a new phone with service (T-mobile) and also if you want to make ANY type of changes to your plan/service require a renewal of your 2-year contract. If you don't want to renew, you can't make any changes.

I have run into this problem with them for awhile, I bought a SE W810i when it first came out in 2006, and signed up for service. Lady on the phone told me I must choose a "free" phone otherwise they could not create an account.

So I have some cheap nokia sitting in my closet still in the box.

In 2007, I added my fiancee and changed to a family plan, which required a new 2 year contract.

At this point, I'm honestly considering just paying the termination fee's for my fiancee and myself just to be free of T-mobile, which would be $400. They charge a separate termination fee per line ($199x2) even though we're on one family plan.

No 3g (yet) and when you compare the phones to other providers, they're bottom of the barrel for the most part.


By FITCamaro on 7/15/2008 7:32:21 AM , Rating: 2
Maybe next time you should do some research before you sign up with a company. And not sign up simply for a phone.


By lifeblood on 7/15/2008 1:33:37 PM , Rating: 2
While I am leary of the government interfering too much with business, I can't help cheering when the big telcos take one on the chin. My phone is ATT and if you look at a map where I live you will see I'm in a zone of good coverage. Yet I have missed quite a few phone calls because my phone never rang or dropped the calls for some reason. Looking at the signal display on my cell phone, it appears the coverage is not nearly as good as ATT advertises. I understand the occasional dropped call, but this is not occasional. Now I could cancel my contract, pay the fee, and get a new contract with someone else, but that doesn't compensate me for the time and money already spent. I have to pay the early termination fee. I spent a lot of time inputting all the names and numbers of my friends/business contacts, etc in the phone. I bought a nice belt clip for the phone. If I cancel, do I get to keep the phone? If not, it's not quite so bad unless I switch to Verizon which is CDMA, then my GSM phone and everything I spent is wasted.

Frequently the courts or the government gets involved in things it shouldn't. But every so often the little guy needs a big brother to back him up.


By hotel77 on 7/25/2008 1:40:30 PM , Rating: 2
I think you need to read again.

Tmobile does not offer the SE w810i...I purchased it unlocked and DID NOT WANT A PHONE FROM T-MOBILE. The phone I bought, I could take it to any carrier...provided it was a GSM phone carrier. So, i didn't sign up with t-mobile for a phone, I did not even WANT a phone from them....

I was on Cingular, and back in 2005, 2006, it was crappy. So so so crappy.... very bad reception, Nice customer service, just dumb as bricks... So I switched to t-mobile. T-mobile does have better service for me, as far as reception and browsing goes.

So yeah, I did my research and T-mobile sounded better at the time...but it's just not worth being constantly locked into a contract for life without paying huge fee's. You just can't do anything that involves changes without extending your contract


By sxr7171 on 7/17/2008 12:53:49 AM , Rating: 2
Seriously, you have no idea. Just go to any carrier and insist on bringing your phone and getting service without a contract. Every carrier offers it, but none advertise it.


By AMDfreak on 7/15/2008 9:53:04 AM , Rating: 1
quote:
Hear, hear.


Here, here. Fixed that for you...


By sduncan on 7/15/2008 10:59:35 PM , Rating: 2
http://en.wikipedia.org/wiki/Hear_hear

"It is often incorrectly spelled "here here"."

Sorry mate.


By Oregonian2 on 7/15/2008 4:56:17 PM , Rating: 2
When we signed up for a "family plan" with AT&T about a year ago we wanted to not get the free phones. We already had our phones (ones bought that work with any vendor (unlocked) so we could use them traveling internationally). We had to agree to the termination fee (etc) just to get the airtime plan even if we took no phones. So we took the phones anyway (thinking we'd just sell them) but they still sit in a AT&T plastic bag sitting in a corner somewhere. Backup I suppose. But anyway, the termination fee had nothing to do with getting the phone itself. This, btw, was at a company store -- not one of the franchise ones.


By Treckin on 7/15/2008 5:03:11 AM , Rating: 1
Not going there, you're a moron.

Sorry, Im honest :P


By Ordr on 7/15/2008 11:05:43 AM , Rating: 2
quote:
Not going there, you're a moron.


Not going where? The land of ad-hominem?
Perhaps you can explain why you think I'm a moron and we can discuss it amicably.

quote:
Sorry, Im honest :P


You're being intellectually dishonest.


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