Sprint Doesn't Charge US Government Early Termination Fees

Sprint doesn’t charge Uncle Sam an early termination fee if he decides to get out of his cellphone contract early. Why? USAToday reports:

“The government will never, never accept such penalty amounts,” then-Nextel marketing vice president Scott Wiener wrote in an e-mail in January 2004…A spokesman for Sprint-Nextel, John Taylor, said the company determined it could not assess the termination fees in its federal contract because it would have been against the law.

Why do consumers put up with these fees, but the government won’t? Why is it illegal to charge the government ETFs, but not us? Perhaps Sprint thought that if they started charging the government ETFs, someone would get wise and question the fees, and anti-ETF legislation would be enacted…

Government relieved of cancelled cellphone fees [USAToday] (Thanks to Jason!)

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  1. boss_lady says:

    Why do consumers put up with these fees, but the government won’t?

    Because the company(ies) can get away with it.*

    *I don’t agree, it just seems to be the status quo

  2. Bladefist says:

    I instantly felt rage when I read this. Then I realized, they’d be using my money to pay the fees, so, I guess this is better for us.

  3. snoop-blog says:

    Because were sheep. baaaaaah!

  4. boss_lady says:

    I apologize if this posted twice.

    Why do consumers put up with these fees, but the government won’t?

    Because they can get away with it.*

    *I don’t agree, it just appears to be the status quo.

  5. zentex says:

    @Bladefist: I’m surprised you’re surprised that the govt doesn’t pay the ETF…then again, I’ve delt with the govt for a spell now…so I guess I’m used to the ‘oddities’.

  6. Bladefist says:

    @zentex: Not surprised. Never really thought about it.

  7. BoomerFive says:

    If it’s illegal to charge the government, why is it legal to charge us?

  8. IrisMR says:

    I guess it’s time for a mass lawsuit or slamming that article in their face whenever they ask for termination fees.

  9. bpclay says:

    not to be the wet blanket, but i’d like to understand the details of the government contract before i pass judgment.

    for instance, is the govt getting discounts on handsets for signing a contract similar to consumers, are the termination fees for add-on personal plans associated with the employer/govt contract, etc.

  10. bdgbill says:

    I really don’t think these fees are all that evil. You usually agree to the possibility of an ETF in exchange for a deep discount for a new phone (or sometimes a free phone).

    I will take a possible fee over a definite one any day. The $150.00 / $200.00 I paid to escape Sprint after 12 years was the best money I ever spent.

  11. B says:

    I’m surprised the government doesn’t pay the fees. They’ve never seen that concerned about overpaying or getting ripped off.

  12. boomerang86 says:

    Most government wireless purchases are for multi-year contracts anyway, making an ETF unnecessary.

  13. blue_duck says:

    If you’re crafty enough, you can get out of Sprint ETF’s. All I needed was the Consumerist’s tips and the BBB and they credited my account for more that the ETF.

  14. fr3nch13 says:

    This is standard practice for any government contract. I work in the defense industry, and any of our contracts can be pulled for any reason without compensation to the company.

  15. Gee, if only consumers had that kind of power…

    …wait…wut?

  16. humphrmi says:

    I’ve heard stories about draconian government contracts. About 15 years ago there was a letter going around the internet from a guy who got a PO from the government to buy his book, and upon reading the contract found that by fulfilling the order, he gave the government permission to take ownership of his book (e.g. the intellectual property) if they chose to. So it doesn’t surprise me that they probably just say in their contracts “no ETFs, period.” It’s a lot of business to say no to.

  17. Jamesn71 says:

    Get rid of ETF’s by getting rid of contracts! It’s BS that your stuck with someone for 1 or 2 years if your not happy or if your phone keeps breaking. I would be happy to pay full price if I could leave and take my phone somewhere else if I wasn’t satisfied.

  18. edebaby says:

    Be real, people. If YOU buy 10,000 cell phones, (or more), you’ll probably have your fees waived too.
    Large volume accounts like this often get breaks.

    Of course, I don’t see anyone complaining that their tax dollars are NOT being wasted on early-termination fees…

  19. Pro-Pain says:

    @bdgbill: Yet you waited 12 FREAKING YEARS??? Maybe try not renewing your contract once in a while. Dumbass.

  20. failurate says:

    @boomerang86: Huh?

  21. Snowblind says:

    @edebaby:

    It also helps to have things like Assistant Attorney Generals sitting on their hands just looking for something to do…

    Not to mention cruise missiles.

  22. bobbleheadr says:

    Many (Many) years ago I sold B2B for a cell phone provider. Government contracts where the holy grail for commissions. The corporate office had a strict deal with the government for pricing/equipment/term. No ETF, they paid for equipment (but discounted) and I could sell 100s of contracts in one meeting.

  23. S-the-K says:

    @BoomerFive: Hear hear!

    Of course, one difference between charging government excessive bogus fees vs. the public is that government has more and larger caliber guns. They also have tanks and artillery. You don’t mess with a guy who has tanks and artillery!

    You also don’t stand on Superman’s cape, spit into the wind, or pull the mask off the Lone Ranger.

  24. TotallyStumped says:

    I manage 600+ cell phones/PDAs across 4 major carriers (AT&T, Alltel, Sprint, and Verizon Wireless) for a gov’t entity. All GSA contracts have the “No ETF” clause built into the contracts. Granted, that didn’t stop T-Mobile from trying to slam us with $200.00 ETF on 8 lines.

    I’m able to upgrade equipment at steep discount but honestly, sometimes the 2 year consumer prices are better. I paid $199 for my husband’s LG Venus but on GSA schedule it’s $169. Granted, I can get upgrade pricing with Verizon after 10 months of service instead of the “New in Two” consumer plans.

  25. Skankingmike says:

    If consumers Unionized and formed a nonprofit conglomerate that pooled in just a few dollars from every individual who signed up. We could start a massive change in consuming territory.

    With the money collected through membership we hire consul and sound business men who negotiate terms and service contracts, as well as discounts. we all become card carrying members and can demand better service or we all stop using a certain product/company/service.

    But that will never happen.

  26. officeboy says:

    Hah, we don’t pay them for AT&T either. :D

  27. Sarge1985 says:

    @S-the-K: “and you don’t mess around with Jim”

  28. B says:

    @S-the-K: Or fight a land-war in Asia. Or challenge a Sicilian when death is on the line.

  29. officeboy says:

    Oh plus our $9.99 a month basic plan.

    /done gloating

    We don’t get the same deals on phones though. And the phones that are available are a little more limited. We also pay the same rates for data (minus our 20% discount)

  30. midwestkel says:

    I wonder if you can get out of your contract by stating this article.

  31. bobfromboston says:

    Has anyone on Consumerist actually worked in a business? When you’re a major customer *everything* is negotiable. If Sprint insisted on the ETF the government could easily say, “OK, thanks. We’re going to see what Verizon has to offer.”

    In that sense the government is just another business. I’m quite sure Wal-Mart, Exxon and other Fortune 500 companies have similar deals with their cellular providers.

  32. Gopher bond says:

    Also, technically, the Government is not allowed to enter into a contract that will increase in cost unless the money is already on the contract. So, if they were to accept termination fees, they’d have to have a funded line item that says “Termination Fees – $10,000″ and it each termination fee would be deducted from that and have to be limited to that total.

    That being said, of course contracts increase in price all the time, but these lead to negotiated modifications and the price increases arise from “unforeseen” events, they aren’t agreed to before hand.

    But most likely is, like mentioned above, that if you say you want to buy 10,000 cellphones and service but don’t want termination fees, you’ll likely be granted that request.

  33. Trai_Dep says:

    @bobfromboston: True. But if the Gov’t had to deal with things that the vast majority of Americans do (ETF, binding arbitration, crappy (non-“socialized”) health insurance…) instead of flashing their “We’re the Gov’t” badge, these things would have been strangled in the crib and ALL our lives would be better.
    So, it’s fair to point out so that the next time we hear from the gov’t – or their minions/stooges – that it’s theses things which make America great, we can at least gather around in a circle, point at them and snicker derisively. And call them hypocrites.

  34. Trai_Dep says:

    And, the issue isn’t, “Why don’t government employees have to deal with these,” but, “Why does anyone“, or at least, “So long as WE must, why doesn’t the government as well”?
    The best way to fix an injustice: make everyone be treated equally.

  35. dualityshift says:

    Individual consumers do not sign up for mass contracts like government or corporation contracts. I would bet big business gets the same treatment. If Sprint won’t waive ETF for 100+ contracts for one group/government/business, the next company will, just to get the business.

  36. XTC46 says:

    Not for profits in general dont pay ETFs. My last employer was a non profit org and we didnt pay ETFs, got phones at the cost of 2 year contracts while signing only 1 year (although no ETF makes that moot), got significant discounts etc. We had 150+ accounts with verizon and 30+ with sprint. the volume made up for not getting an ETF and it made it easier for us to make account changes on the fly.

  37. scooterist says:

    This doesn’t seem to be a case of the “government” getting a deal because they purchased 1000’s of phones and contracts.

    It sounds like Sprint just decided it wasn’t worth the hassle of actually charging them because they acknowledge that “the government will never, never accept such penalty amounts.” That phrasing doesn’t sound like it refers to a pre-arranged part of the contract to me.

    So they just decided to not charge the government client because they “wouldn’t accept it”, but they will charge every other poor schmuck in the country who presumably will accept it.

    BTW, which particular part of the gov’t is being referred to here? Each department probably negotiates its own contract, so which government entity is this about?

  38. dorastandpipe says:

    This is standard for any large contract, not unusual for them to not pay late fees either.

    I worked for a large telecom and approved bills in the amount of 50k monthly, we never paid late fees, always net 60. Lots of small companies did not like it, but it takes time for things to get from my desk in Mpls to the corporate office in Chicago once I approved the bill for payment.

    So, do your best to get in on a large corporate plan that does not have these fees in the contract.

  39. Gopher bond says:

    @andykay: “So they just decided to not charge the government client because they “wouldn’t accept it”, but they will charge every other poor schmuck in the country who presumably will accept it.”

    The Government CANNOT accept it, by law. The Government would have no way of knowing how many terminations would occur over the course of the contract and therefore does not have a defined requirement. The only way the government could legally accept termination fees is to fund all potential termination fees up front, and then recoup the money if the account was NOT terminated. Would you want to pay a termination fee up front and then get it back when you didn’t terminate? Neither would the Govt.

  40. scooterist says:

    @testsicles: “The Government would have no way of knowing how many terminations would occur over the course of the contract and therefore does not have a defined requirement.”

    Why would the Gov’t have to terminate any of the phones over the life of the contract? Whenever I’ve been in a job where a company had a contract with a cell phone company and someone left, their phone just went to the person that replaced them. If there was no replacement person, then the phone either went to someone else, or was just put back into storage until it was decided who would get it. The minutes didn’t matter because they all came out of the same bucket o’minutes anyway.

  41. Don’t they sign the same contract that we do, where they agree to the ETA if they cancel a line?

  42. Gopher bond says:

    @ConsequencesIX: No, entering into a contract with the Federal Government requires a host of special considerations. The Federal Acquisition Regulations are 2000 pages long and every Government department has it’s own 1000 page long addendum to it.

  43. stevejust says:

    early termination fees aren’t legal. I can’t for the life of me figure out how they’ve lasted for as long as they have. Any first year law students taking Contracts learns that liquidated damages provisions in contracts are illegal if they are punitive — they must be narrowly tailored to cmopensate the party for the harm of the breach. Cell phone contracts with early termination fees have never even come close.

    [en.wikipedia.org]

  44. zolielo says:

    Basically no prepayment or early termination fees ever for the government. Sometimes it is a battle but 99% of the time I have see the firm back down against…

  45. RandomZero says:

    Both speculations as to the reasoning are partially correct. Sprint (or at least the Nextel section, where I worked and where most of the corporate business is) has a Key Corporate section for its biggest customers, all of whom have special clauses in their contracts, special pricing, and access to special rate plans. Government typically is key corp. The plans are ridiculous compared to what consumers get, too – unlimited data for $20-50, unlimited airtime for $10, in some cases custom-designed phones and other equipment, priority traffic, and other little perks.

    There’s also a less-extrenive list of perks available for employees of anyone with a Corp, Key Corp, or Gov’t account, which will certainly include cheap rate plans and may include discounted phones or (especially gov’t) commitment waivers. If you’re stuck with Sprint, check it out. (And if you’re unsure, yes, the consumer-level reps have a list of all the corp and key accounts.)