Sprint Ordered To Refund Early Termination Fees to Customers

A termination fee that amounts to about $200 is a large amount of money for most people. Apparently, a state judge has agreed with those hit with this termination fee.

Late July of this year, the California Judge Bonnie Sabraw has decreed that Sprint Nextel must refund $18.25 million to their customers who have paid this fee for early termination of their contract – ordinarily with a length of one or two years. Part of the decision still to be ironed out is the forfeit of the $54.75 million levied and collected but unpaid by the consumers in the said state. The suit mentions that about 2 million Californians had this fee collected due to early termination.

Several of the major wireless carriers have recently reconstructed their early termination fees as a move to avoid embroiling their companies in lawsuits. Among them are T-Mobile, AT&T and Verizon, the last of which has already shelled out $21 million in settlements for similar charges. These companies have agreed to implement pro-rated fees in their rectified fee schedules which now charge the consumers a more reasonable amount of penalty depending on the duration elapsed before the cancellation of the subscription and contract. Cases like these have caused the Federal Communications Commission (FCC) to consider the regulation of early termination fees nationwide, as not only are they an issue in the state of California but in the entire United States. Along with this FCC review will come an evaluation as to whether to prevent class action lawsuits like the one in Sprint Nextel's case.

There are many consumers that have expressed agreement and relief over the court's ruling. Some consumers view it as a decision that's been a long time coming, since included in the reference for the decision is the mention of a California law from the 1980's, particularly the civil code 1770 (a) (19) that prohibits and finds it unlawful for a company to raise high fees to prevent a customer from leaving the service.

The bottom-line is that the legal departments of the respective telecommunication companies should not have disregarded the previous mandates, which could have possibly averted this possible loss of millions of dollars and legal costs due to the court charges.

However, there are some that seem to think the errors lie on both sides. Many feel that a multimillion penalty should not be shouldered by Sprint Nextel, or any telecommunication company for that matter, when both parties have signed a legally binding contract. This contract, including the $200 early-termination fee, is subjected to the consumer's approval before being considered legal, hence the agreement is made to subject oneself to the $200 charge. If a one or two-year contract seems to be unsatisfactory or too long for a consumer, there are also options available such as prepaid plans or plans that do not have binding contracts, which may be useful especially if the service is yet to be proven.

The public views may vary but it's official that the court has decided the best course is for a refund to the consumers. These early termination fees, according to Sprint and other telecommunication companies, are imposed for the subsidy of the handsets and the monthly rates. More state decisions and laws concerning the mobile industry, especially since the number of cell phone users is growing rapidly, are expected to be touched on and reviewed as well in the legal community.