Verizon Redefines "Materially Adverse" To Prevent Customer Cancellations

Marie needs help getting her Verizon contract canceled without termination fee. The supervisor she wrangled with decided that he’s going to reinvent standing contract law…

Read her story and how she can fight back, inside…


I just had to say that those people at Verizon Wireless are relentless. After an hour on the phone even following the script I was not able to get out of the contract because of the price hike. The supervisor kept saying….”come on Marie…this not going to affect you at all.” He basically said that is was not enough of a price change to qualify as a “Material Adverse Effect.” But of course he could not tell a dollar amount that would be considered. I guarantee if I was short on my bill even $5 and just never paid that they would send me to collections. It just blows my mind that they can notify you of changes and tell you to look at your agreement but then not honor that agreement themselves. I almost want to cancel and pay the fee just so they do not get my business anymore. I did send in a complaint to the BBB and FCC. I realize it is a lost cause. Thanks for all the great articles. I love them. – Marie

Marie! It’s not a lost cause! Any materially adverse effect is a materially adverse effect, whether it’s $5 or $500. It’s an on/off switch. Either something is materially adverse, or it isn’t

We suggest calling back and trying again. Stick to your guns. Eat away their clock. Inform them that it’s a breach of standard contract law to not let you leave.

Repeat this:

“If it is not a materially adverse effect, you would not have been legally obligated to send me a legal notice. Since I recieved one, this qualifies. cancel the account.”

P.S. You can add the Public Utilities Commission as another place to file a complaint with. — BEN POPKEN

RELATED: Script For Escaping Verizon Contracts Without Fee, Based On Text Message Rate Raises
(Photo: Sam Wilkinson)

Comments

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  1. greggt says:

    hmm, let’s see. under included features i have $0.15 text messaging, and then under remove features i see $0.10 text message. which is it? further i cant even remove it, i’d like to opt out of receiving any more texts

  2. patoco12 says:

    Ben,

    There is a Logical Fallacy in your reasoning!!

    You say (sort of):

    “If there is a material adverse effect, then Verizon is legally obligated to send a legal notice.”

    OK, that is fine. But then you state this:

    “If you receive a legal notice from Verizon, then there was a material adverse effect.”

    That isn’t necessarily true.

    Another example:

    “If it rains outside, then the sidewalk will get wet.”

    From this statement you CAN’T say:

    “If my sidewalk gets wet, then it rained outside.”

  3. dickius says:

    Ben,
    You’re not a lawyer. You don’t know what you’re talking about. Not every change is a MAE.

  4. Falconfire says:

    @dickius: any change where they sent you a notice of change means they are legally changing the contract so much that they are required to restate terms.

    This then qualifies as a nullification of said contract

  5. Ass_Cobra says:

    Ben, not following this:

    “Marie! It’s not a lost cause! Any materially adverse effect is a materially adverse effect, whether it’s $5 or $500. It’s an on/off switch. Either something is materially adverse, or it isn’t”

    You are defining something that is materially adverse as anything that is materially adverse. I get it, but it’s a tautology. Are you saying that any change is materially adverse? That’s not the correct way to look at it, the change needs to be viewed in context. I’d say that for this Verizon that the change should be looked at in proportion to the text messaging rate so .10 per message vs. .15 per message is a 50% increase, which any one would have a hard time calling non-material.

    Verizon’s argument for non-materiallity based on a customer’s past usage habits is specious. Whether I have used the service or not in the past is immaterial. The fact that I must either enter into a monthly plan or pay 50% more per message than when I signed up to utilize the service is the issue. I am not getting the benefit of my initial bargain. That’s all there is to it. Imagine if you had insurance that was not freely cancelable (a stretch, but bear with me). Now imagine that your insurance company raised your deductible 50%. Now imagine that you call them and they say, well, you’ve never had an accident to date, so you’ve never paid your previously lower deductible so this new change probably won’t impact you. Right, that would work.

    Verizon had a simple choice to avoid this mess. They could have left text messaging rates unchanged for in place contracts. I think it would make sense to ask whichever obstacle you get on the phone why they didn’t do this. I’d imagine because they looked at the number of consumers that would change plans based on text messaging rates vs. the increased revenue realized by adjusting upwards in place contracts and realized they make more money jacking up each plan. They chose to jack up even in place contracts and I can assure you the cost of losing ETFs and customer revenue was taken into account in their decision.

  6. Gopher bond says:

    Let’s say we have an agreement where you buy 20 widgets from me for $1.00 each and I tell you to call Bob for tech support. If I call back and tell you to call Tom for tech support instead, no problem. If I deliver 10 widgets and then tell you the next 10 are now going to cost $1.50 each, problem.

  7. gorckat says:

    I just checked a couple online law dictionaries- can someone point to one that includes the phrase “materially adverse”?

    I found an article relating to employment law and employer retaliation, but can’t find a straight up definition regarding commercial matters.

  8. bluegus32 says:

    @dickius: you said, “Ben, You’re not a lawyer. You don’t know what you’re talking about. Not every change is a MAE.”

    Well, I am a lawyer and Ben is right. The change is material. Keep in mind, further, that materiality is a question of fact for a jury. In other words, whether something is material is something that a layperson juror is asked to determine. Lawyers can argue materiality but they are not qualified to determine materiality.

    Now, Ben is particularly qualified to testify as to materiality becuase he is (1) a layperson and thus qualified to make a determination of materiality and (2) the editor of a significant consumer advocacy blog. He is, in a way, a consumer expert. Thus, his opinion holds a tremendous amount of weight in my book.

    Finally, Ben’s reasoning is apt. Presumably, Verizon is not required by law or contract to inform customers of every little change in the contract. In fact, I’d imagine that Verizon is only required to inform you of material changes. Thus, when you receive a notice that the terms of your contract have been altered, it is logical, and legally permissible, to conclude that the changes are material, thus giving you the right to withdraw from the contract.

  9. bluegus32 says:

    gorckat: “Material Fact” is defined in Black’s Law Dictionary as “One which constitutes substantially the consideration of the contract, or without which it would not have been made.”

    In other words, in this context, you entered the contract when it cost $.10 per text message. Would you have entered the contract at $.15. If not, then the change is material.

    It’s not quite as simple as that but close enough.

  10. eightkid says:

    Call Verizon and tell them that the Administrative Fee increase from $.40 to $.70 is materially adverse. Abandon the text message increase, it’s not worth the fight. The Admin fee increase works like a charm. I did it three weeks ago. The fee change is on the Feb bill.

  11. blander says:

    I am a lawyer as well, and in my opinion the change is material. It’s a 50% increase in the price of a service which was already contracted for. The past use is irrelevant, it was part of the contract already, and it could affect future use.

  12. hang says:

    Marie, for the sake of your sanity and time, please record every phone conversation with Verizon Wireless even if you’re not sure if you’ll get a CSR that agrees with you. I went through the same problems you did and kept calling and calling. Eventually a CSR canceled my contract with a written note for an ETF refund but she obviously lied. Now I have to go through the process of BBB and small claims court to clear my balance before they send this off to collections. Best of luck, Ben is right, keep trying. Verizon Wireless is a horrible company to deal with.

  13. manufactured says:

    @bluegus32

    I have to disagree with your interpretation of what “materially adverse” means. It seems that you are comparing it to the definition of a “material fact” but, I believe, that is incorrect.

    In contract law, whether a term is material is of little consequence. Still, assuming the price of text messaging was not material to a person upon contracting with Verizon, a text messaging rate hike the following year might be materially adverse if that person has become an avid text message user. This means that even if a term is not material at contract formation, a change to that term may be materially adverse.

    Also, in this case it is not up to a jury or factfinder to decide whether the term is now material because the Verizon customer only needs say to “The rate hike is materially adverse to me.” This is a subjective question. If the customer feels they do not like the new fees associated with text messaging, then they need only say so and end the contract.

    I do concede though, different facts might change the result. For example, let’s say this was a multi-million dollar contract for widgets and the contract stated that if a “modification” was materially adverse to a party then they could end the contract. The contract states that Marty Manufacturer is to deliver 1,000 widgets the first of every month and receive $1,000,000 upon delivery. Now lets say that MM modifies the contract to read $999,999.99 which is a penny shy of a cool million. Would this allow Barney Buyer to scream “materially adverse!” and end the contract? No (assuming the contract allowed for any modifications along with the materially adverse clause – just like the Verizon contract).

    So the moral of the story is, if you have never sent a text message in your life, or text messaging is merely 1% of your monthly bill, you probably can’t get out of your Verizon contract. But if you spend, say, $5/mo on text messaging services, then you probably can.


    P.S. I would LOVE to see someone claim (and I am 100% sure they could) that redefining “materially adverse” is materially adverse to them and ask to end their contract. I am 100% positive that would hold up in court.

  14. Stepehn Colbert says:

    @dickius: in accordance with what Bluegus said, FACE!!!

  15. mstanesic says:

    Hey eight kid. It is Marie. Actually I did fight the admin fee increase more than the text increase. And they basically laughed at me. He said the difference that I would be paying is an additional eight dollars until my plan is up in 2008. So he said he will just credit me $8 and then I can not use that to get out of my contract. I am very frustrated. I am going to keep trying though because the admin increase does not go into effect until March 15.

  16. Dont Know Me? You Are Me. says:

    With this and all the other Sprint/Verizon stories regarding material changes to the contract, I smell class-action coming!!! Too bad, because the lawyers are the only ones that win those.

  17. grouse says:

    So he said he will just credit me $8 and then I can not use that to get out of my contract.

    I imagine that would hold up in court. Since you would not be out a single additional penny, it would be very hard for you to argue otherwise.

    Frankly, I’m surprised that these companies don’t do that sort of thing more often—raise their rates, and then lower them for people who then want to cancel.

  18. bluegus32 says:

    manufactured: sorry, I have to disagree. You said, “Also, in this case it is not up to a jury or factfinder to decide whether the term is now material because the Verizon customer only needs say to “The rate hike is materially adverse to me.” This is a subjective question. If the customer feels they do not like the new fees associated with text messaging, then they need only say so and end the contract.”

    You’re just flat out wrong on this one. Unless the contract provides one of the contracting parties the right to withdraw upon some subjective complaint, then the contract is always interpreted objectively.

    We don’t use subjective analysis of contracts because that would grant too many people free license to unilaterally withdraw from a contract. And that is against public policy.

    It is most certainly an objective, not subjective, standard that is used. Therefore, it remains within the province the jury to determine materiality.

    And just so that I’m not doubted, let me cite my sources. Mine are based on California law. However, California law is based upon the Second Restatement of Contracts, which has been adopted in every state in the union. Therefore, California contract law is an acceptable analogy to the contract law of every other state.

    “In interpreting a contract, the objective intent, as evidenced by
    the words of the contract is controlling. We interpret the intent and scope of the agreement by focusing on the usual and ordinary meaning of the language used and the circumstances under which the agreement was made.” (Lloyd’s Underwriters v. Craig & Rush, Inc. (1994) 26 Cal.App.4th 1194, 1197-1198 [32 Cal.Rptr.2d 144], internal citations omitted.)

    “Generally speaking, words in a contract are to be construed according
    to their plain, ordinary, popular or legal meaning, as the case may be.(Hayter Trucking Inc. v. Shell Western E & P, Inc. (1993) 18 Cal.App.4th 1, 15 [22 Cal.Rptr.2d 229].)

  19. manufactured says:

    @bluegus32

    “Unless the contract provides one of the contracting parties the right to withdraw upon some subjective complaint, then the contract is always interpreted objectively.”

    Correct. The Verizon contract allows for withdraw based upon a subjective complaint. Here is the snippit:

    “WE CAN ALSO CHANGE PRICES … IN THIS AGREEMENT AT ANY TIME BY SENDING YOU WRITTEN NOTICE. IF YOU CHOOSE TO USE YOUR SERVICE AFTER THAT POINT, YOU’RE ACCEPTING THE CHANGES. IF THE CHANGES HAVE A MATERIAL ADVERSE EFFECT ON YOU, HOWEVER, YOU CAN END THE AFFECTED SERVICE, WITHOUT ANY EARLY TERMINATION FEE”

    I agree with you that, if a term is not defined in the document, and cannot be determined through course of performance or course of dealing, it can then be found through usage of trade, which is as you quote “the usual and ordinary meaning of the language used and the circumstances under which the agreement was made.”

    However, I argue that some language in a contract is indeed subjectively defined. For instance, let us pretend the contract read as follows:

    “WE CAN ALSO CHANGE PRICES AND IF YOU CONTINUE TO USE YOUR SERVICE, YOU ACCEPT THE CHANGES. HOWEVER, IF THE CHANGES ARE NOT SATISFACTORY TO YOU THEN YOU CAN TERMINATE YOUR SERVICE.”

    A court will not use the usage of trade to define the phrase “satisfactory to you” because it is impossible. A $.05 rate hike may be satisfactory to me because I really could care less about $.05, but it might be unsatisfactory to you because you might be a penny pincher and every penny counts. I equate the phrase “material adverse effect on you” to mean the same as “unsatisfactory to you” and therefore, in this set of facts, basically any customer of Verizon can end their contract by merely claiming the rate hike is materially adverse to them.

  20. grouse says:

    I equate the phrase “material adverse effect on you” to mean the same as “unsatisfactory to you”

    See, that’s the bit that I don’t think will fly. “Material adverse effect” is a question of fact, where “satisfactory” is a question of opinion, absent other terms defining satisfactory.

  21. silverlining says:

    Marie, even if you get out of the contract, you should still complain. If you are indeed ultimately entitled to get out of the contract (and it sounds like you are) then Verizon has no right putting roadblock after roadblock up in your efforts to enforce your rights under the contract between you and Verizon.

    I’m a Verizon customer, and boy, am I less than impressed with this kind of treatment. Don’t their PR people ever read this blog and say, gee, can’t we do better for our customers…? (Naive, but still…) Believe me, as soon as a better coverage network comes out… buh-bye Verizon!

  22. impious says:

    “See, that’s the bit that I don’t think will fly. “Material adverse effect” is a question of fact, where “satisfactory” is a question of opinion, absent other terms defining satisfactory.”

    When I called Verizon to get out of my contract the customer service supervisor that I eventually talked to basically told me that if I said the change had an adverse effect on me, then they would have to take my word for it. However, the way he asked it was “Are you saying that this increase will have an adverse effect on your ability to pay your bill?” Which is a bit different and much more specific.

  23. mikekraz says:

    Just as an FYI…I was able to successfully request that both of my lines be noted for cancellation without a termination fee. My wife and I both utilized this and it worked without any major hiccups.

  24. zoomzoomers says:

    I called Verizon and talked to a supervisor. He stated that on my bill the admin fee is listed as $0.40 in Feb., March., and in April I cancelled my service. He stated that there were no hikes in fees on my service. I got his name and agent #, but there was nothing to argue as it seems I didn’t get a hike. Hence, leaving me with nothing to leverage my argument on. I would like some advice.

  25. digitalbrian says:

    It is all fine and dandy but what happens when you get a letter in the mail saying that you are stealing copyrighted material off the Internet, and your Cable Internet provider cancel your account without any warning?

    Or when you reach the “unspoken” bandwidth level of your ISP because you are downloading all those show? what are you going to do then?

  26. digitalbrian says:

    Just LIE! they lie to you all the time, write them a letter in which you state that you went to the local store and someone there allowed you to cancel without a fee, if they give you shit just tell them that you are going to file a complaint if they dont honor their own personnels promise.

    Not even Verizon wants to waste time on you then, of course you could always move to Europe like I did, well said I did anyways.

    :) If they wont play nice, why should you?

  27. David M Copple says:

    This is horrable i have a simular problem, they raised their FUSC charge 14.44% and their Admin charrge 10.45% as well as text messaging charge,

    Somehow the managers dont see this as material adverse, to boot one manager lied to me and told me i wont see a change! 7 other managers agree it’s material adverse but say corporate sent an email stating they cant credit the ETF charge! HOW can a company go against their Contract that they enforce everyone else to follow??? better yet the corporate email has no function on the customer agreement with them because at the end it states that anything oneone says that isnt on the contract is NULL and void.! so they attempt to hurt us consumers for no reason. i cannot believe that this type of company should even be allowed to function in the USA.