Judge Rules That Early Termination Fees Are ILLEGAL In California

A California Superior Court judge has ruled that cellphone early termination fees are ILLEGAL and that Sprint must pay $18.2 M as part of a class action lawsuit. Of course, the decision could be appealed, but in the meantime…. (drum roll, please) the judge ordered Sprint to stop trying to collect the fees from customers in California who were refusing to pay them!

According to the lawsuit, this ruling will affect about 2 million Californians, and may affect other, similar lawsuits that are pending in other states, says the San Jose Mercury News.

“We are disappointed,” Sprint Nextel spokesman Matthew Sullivan told the paper.

Consumer’s Union (you know them as the publisher of Consumer Reports) were pleased with the ruling.

“This is a huge victory for consumers,” Chris Murray, senior legal counsel for Consumers Union said in a press release, but expressed concern that the FCC might step in and start regulating the fees.

“Not only did this case generate an extensive record showing that these fees are not really used to subsidize wireless phones, but are instead simply used to lock consumers into contracts. Contract law says that’s illegal. Let’s hope the FCC doesn’t turn around and give the wireless industry a get out of court free card.”

We’re looking forward to seeing how this affects our readers in California, so if you’re battling Sprint over an ETF and you live in CA, send your story to tips@consumerist.com. Let us know how they’re reacting to this ruling!


Sprint loses early termination fee case in California
[Consumers Union]
Sprint early termination fees are illegal, judge rules [Mercury News] (Thanks, Gilbert!)
(Photo: smcgee )

Comments

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  1. nealb says:

    $18.2? I doubt they’re too worried about that.

  2. 3drage says:

    I had a really hard time with Sprint. I went online and elected a lower plan from them and they automatically extended 2 years onto my contract. No new phone or anything. So I was stuck with a very old cell phone up until the point where I found an out at Consumerist for change of contract. 6 months before my contract ended I was able to cancel and pick up my iPhone.

    Sprint is a pretty shady provider, and glad to see that the courts believe it as well. It’s pretty messed up that they can tack on 2 more years to your contract for a minor change in service.

  3. AnxiousDemographic says:

    The OP should read “Sprint must pay $18.2 MILLION as part of a class action lawsuit” according to [www.siliconvalley.com]

  4. trujunglist says:

    So, are all ETF’s illegal in California or just Sprint ETF?

  5. ironchef says:

    I’ve NEVER bought a phone with a 2 year contract. Mine comes with 6 month contracts as the norm. It’s actually negotiable when you venture to small mom and pop 3rd party dealers (not the company run stores but some smaller shop hungry for business.)

    You just have to ask. Shops in Chinatown do this all the time.

  6. audiochick says:

    “We are disappointed,” Sprint Nextel spokesman Matthew Sullivan told the paper.

    I’ll bet they are!

    I only hope Washington state follows suit…

  7. Crabby Cakes says:

    My parents called Sprint the day before their contract ended to tell them they would not be renewing the contract. They had it set up w/ T-Mobile to port their numbers the day the Sprint contract ended. My father said, more than once, that they we not canceling their contract, they just did not want it renewed.
    And Sprint hit them with the $250 ETF anyway and told him that saying you’re not going to renew your contract is the same as canceling.
    They’re still fighting the charge, but they’re in NY. I hope this sets a country-wide precedent!

    • rwalford79 says:

      @Crabby Cakes:

      Im not going to side with Sprint, however….

      A customer goes MONTH TO MONTH once their contract has ended. IF a customer calls in and says (even on the last day) they are not going to continue service (ie, go month to month, resign contract, or disconnect AFTER the contract end date) after their contract is over (which ends at midnight later that day) then its as good as terminating service on that call, and they are liable for the fee.

      The best suggestion is to not have said anything to Sprint and ported the numbers over, the day after the contract ended.
      The next best suggestion if they didnt want to keep their numbers is to tell Sprint that you will be selecting another mobile provider, and you would like services disconnected at the end of the billing period (which might take you days after the contract end date), to ensure services are outside the contract period.

      On the other hand, most people dont understand how mobile companies think, so I kinda feel bad for your parents, however, the companies dont need to be notified if you are moving to another provider, its not like changing your credit card bill.

  8. ds143 says:

    so will this spread to other states?

  9. jdmba says:

    Forget other states … how does this affect the carriers who were not sued, but are in California.

    If this is a way out of my AT&T “service” (hint: Coverage Map shows “Moderate” = absolutely no signal whatsoever) I would like to know about it.

  10. balthisar says:

    Okay, for those that didn’t read the FA, it’s a tentative ruling, not yet made permanent, and subject to Sprint’s rebuttal. This can all happen prior to the appeal process. Also, this is a state court making a ruling over a state law.

    If your service doesn’t work where it’s supposed to work, or if they change your rates during the contract period, or if there’s some other form of non-performance, then that’s a good reason to break a legal contract without and ETF. But for most little whiners, just don’t sign a contract if you’re not going to hold up your end. There are non-contract plans available. Why should ETF’s be illegal in principal? This is like the mortgage crisis on a small scale. Too many people are not willing to be responsible for themselves, and then cry and whine to the government when things don’t go their way. ::sigh::

    • rwalford79 says:

      @balthisar:

      My AT&T service didnt work recently as they advertised. I had 1 BAR EVERYWHERE for 3G on a data card, and 4 BARS on EDGE. The coverage maps show FULL COVERAGE for 3G. The data card I bought was in a computer, advertised EXPLICITLY as “3G DATA” not “EDGE DATA”, the data card was set to 3G ONLY, over the option of 2G ONLY, and AUTOMATIC for “Network Data Bearer” selection. Leaving the impression, they are only selling 3G services.

      They advertised data speeds over 1.5mbps, and I was getting 300kbps, I complain, they send a chart of “data speed” that is incompatible for the modem I have. They said UMTS was 300kbps and I was getting optimal speed. They dont realize is that I have an HSPA modem which is capable of the 3.6mbps speed, and I should be getting 1.6mbps on average – I did not ever get more then 900kbps (and that was the first week).

      I then moved out of the coverage area, and asked to disconnect service, and since they do not offer service in the area I am moving (by about 150 miles outside the coverage area) I asked the ETF waived. They are refusing, so I filed with the BBB, who told AT&T – who then bounces my claim back and forth to other offices around the nation claiming it is not their problem.

      At the end of the day, do I think ETF’s are illegal, HELL YEAH! Do I think they should only be legal under certain circumstances, yes I do, and those should only be limited.

  11. Silversmok3 says:

    Yay!Nice to see the courts enforce the rules AGAINST the companies.

    Now lets make this nationwide!

  12. t325 says:

    If you sign a contract, then IMO, the carrier has every right to charge you an ETF. It’s a legally binding contract and both sides have to hold up their end of the bargain. Carriers should have to offer contract-free plans, with no subsidized phones, but if you sign a contract for a discounted phone, then you should be subject to an ETF.

  13. trogam says:

    Well, California has a tendency to set a precedent for other states to follow. In this case it will be a good thing….

  14. lalaland13 says:

    I heard this might mean that carriers who don’t offer contracts because they legally can’t will jack up the price of the phone, because the ETF was a way to cheapen the phone price. Not sure how true that is, though.

  15. TVarmy says:

    Personally, I’d like to be able to choose between a contract with a termination fee and a contract without one, as I feel just having a contract without the termination fee would drive up prices, as then the service would no longer try to subsidize equipment by trying to get people to stay with the service. When I know the service is good and that I’ll most likely want it for a year or two, I would like a termination fee-type contract to subsidize it.

  16. @t325:

    If you sign a contract, then IMO, the carrier has every right to charge you an ETF. It’s a legally binding contract and both sides have to hold up their end of the bargain. Carriers should have to offer contract-free plans, with no subsidized phones, but if you sign a contract for a discounted phone, then you should be subject to an ETF.

    I couldn’t have said it better myself.

    Welcome to the end of free and subsidized phones, people. If ETFs are outlawed, the companies will have to protect themselves by making a profit on each phone. Otherwise, there’s nothing to stop people from switching carriers every two months to get the newest and best handset.

    It’s a contract – if either side breaks it, there should be pain for that party. We can’t have it both ways.

  17. calldrdave says:

    @balthisar: Too often there is no “signature” Signature indicates that terms are offered and proof of acceptance is provided. Too often (myself a victim) contracted are extended without consent or agreement. Complaint about a charge, they credit it back…but then extend the contract. Yes, if you get a subsidized phone and sign that you understand you are locked in for two years, that’s fine. All these “acceptance by action” crap the companies pull is completely unfair.

  18. the_wiggle says:

    @audiochick: and Arizona

  19. HonestNigerian says:

    You forget that phones aren’t always subsidized. If I bring my own phone I shouldn’t have to pay an EFT if I want to cancel. Right now, no company does that. you sign with us – you must have a contract. I haven’t had a Tmobile phone in about 5 years yet when I want to change my plan they had on an additional year contract. they do this often and I have to call and fight it. I’m not even getting any special plans. yet they tell me thier computer auto tacks on an additional year and they have manually remove it. What load of $hit.

  20. Silversmok3 says:

    @InfiniTrent:

    That, sir , is a good thing.For two reasons:

    One,Id rather pay $300 to get a cell phone( actual price,BTW)then pay $1500+ on a 2 year contract to save, drumroll please,$150 ( which will partly be composed of the oops-didnt-cross-your-t’s sure to be declined mail in rebate )

    With a $200 gotta cancel b/c of job loss/divorce/other fee.

    Two, you can use the same phone across different carriers(barring GSM/CDMA compatibility).So no need for new phones anyways.

    Third, no more one-sided BS with cell phone companies on the greener side.

    Fourth, us cell phone sellers can deal with less BS with contracts!

  21. valthun says:

    @Alipaps: Your parents should go to small claims and report them to the state attorney if it is exactly as you state it. That they called to state they are not going to extend the contract and will close service on the date the contract ends. There is no fighting with a company that hits you with a fee for ending service after the agreed to time and fees have been paid. The case you stated is small claims court and totally worth the time to file the papers. bringing it to the state attorney will also help bring in others that may be having the same issue and cause an investigation into the company.

  22. 44 in a Row says:

    You forget that phones aren’t always subsidized. If I bring my own phone I shouldn’t have to pay an EFT if I want to cancel. Right now, no company does that.

    I agree with this completely. I have zero problem signing a 2-year contract, with an ETF as penalty for breaking it early, if the phone is being subsidized. As others here have said, it’s part of the bargain; the carriers are giving me a break on the price of the phone (and let’s be realistic here, phones bought out-of-contract at retail price are pretty expensive) in return for me agreeing to stay with them for two years, and that’s perfectly fair. We can argue about pro-rating, and the actual amount of the ETF, but the concept of it is completely fine. But only offering 2-year contracts with ETFs even for those people coming in with their own equipment is, in my opinion, absurd.

  23. Silversmok3 says:

    @t325:

    Yes, they have a right to charge you an ETF.
    The customer also has a right to a consistent and honest bill, common sense solutions to techincal issues, and has a right to NOT have their contracts extended without permission .

    ( A trick Sprint is known for BTW)

    Know of any other consumer tech device that needs 3 sheets of paper to buy?And must pay to cancel?

    Imagine paying $200 to ditch your iPod.

    Or coughing up $150 to change from Xbox to PS.

    Could you picture paying Ford a $1000 ‘cost recovery’ fee to trade in your car?

  24. badgeman46 says:

    I could care less if I get a free phone or not, they are all crappy and break easily. Plus spending thousands to save 50 or a hundred bucks is just silly. I guess its a case of once bitten twice shy, but I refuse to do business with ANYONE, who uses contracts. I’d rather live in the dark ages than be enslaved to some service.

  25. timmus says:

    This is like that villain in Spy That Shagged Me saying the line “$18.2 *MILLION* dollars”, with someone forgetting it needs to be BILLION.

  26. bizside says:

    I just paid mine, after holding out for months and until Sprint told me it was going to go to a collection agency (and ruin my credit rating) … anyway to get my money back?

  27. randombob says:

    What’s different from this post to the last post on the matter? Didn’t this hit yesterday as well? Or the day before?

  28. LochNess says:

    Not a Supreme Court judge, a Superior Court judge.

  29. Ooo… this could get hairy if early termination fees were revoked in California (I don’t see that happening, though). I’ll bet dollars to donuts that the cost of phones will go up by $100-200 for California residents, but that the ‘contract’ won’t change, nor will the monthly rates…

    I live in California. As I tend to make my choices well, I don’t mind getting a big discount for signing a contract. This isn’t the best practice companies have ever come up with, but I’m not quite sure how the caged tiger will react…

  30. Dabigkid says:

    This decision is stupid if it applies to people who already have binding contracts.

    The reason is because payment fees act as a cross-subsidy for the actual cost of cell phones. In econ jargon, that basically means you pay for an underpriced phone and an overpriced service.

    Currently many people have lots of underpriced phones that the companies expected to make a profit off of in the long run because the consumers were bound to the contract. So do not be surprised if the prices of cell phones rise sharply in California.

    If this were to only apply for people who buy new cell phones, I’d have less of a problem with it. I’d still not like this decision, but at least companies wouldn’t be totally fucked because of it.

    But no. Now these companies are going to lose a TON of money when you see a wave of people start canceling their contracts without paying a surcharge.

  31. Silversmok3 says:

    @Dabigkid:
    Trust me, they wont loose a lot of money.

    Example:
    Sprints Palm Centro can be bought for $29.99 with all the subsidies .The condition is that a data plan must be added to get the price, so you’ll be paying around $69.99 per month

    The phone costs $445.00 retail.

    The subsidy = $415.01 that Sprint eats.

    Enter the monthly plan. To get the subsidy you must sign a new 2 year agreement with a phone+data plan costing at least $69.99.

    Over 24 months that = $1,679 .With an early temination fee of $200.

    Therefore,Sprint makes a net of around $1,264 per customer.

    While I do not know how much Sprint spends per subscriber to provide service, I do know that Employee and SERO plans are sold at $25.00 per month rates.
    With more or less the same features.

    If Sprint goes Chapter 11,it wont be from en masse contract cancelleations .

  32. nequam says:

    @Silversmok3: Nice math, but RTFA. Here are the real numbers, as developed in the case itself:

    “Sprint and other wireless companies have long contended ETFs are necessary to recoup losses they claim to have incurred from providing free or discounted phones to customers when they sign up for long term contracts. However, research that became public during the Sprint lawsuit showed the actual phone subsidies paid by wireless companies average only about $14, nowhere near the ETF penalties, which range from $150 to $250 per phone line.”

  33. nequam says:

    @Silversmok3: I should add that the “retail” price you cite is based on a premium one pays for an unlocked phone.

  34. CaptZ says:

    Ok….what if…..

    Like apt leases, you end your lease early they can hit you with the rent for each of the unused months of your lease. What if instead of an ETF, cell companies decided to go that route. You end your contract early, you are still responsible for the minimum charges for every month you have left on your contract. Would that be fair? For those arguing against ETF’s this will be the alternative the cell carriers can go to and it would be legal.

  35. parrotuya says:

    $2.39 cents. That’s what I got from a class-action suit against UCARCO years ago. The lawyers got rich but the plaintiff’s got the shaft. Let’s waterboard all of Sprint’s management and all the lawyer scum with them. Remember, if you believe in torture, vote for John McCain because he is for torture. Which, by the way would make the waterboarding of these CEOs legal! Let’s all do our best Lindy pose!

  36. enderx says:

    You guys aren’t going to like what this’ll actually do to you.

  37. jamar0303 says:

    Eh, if phone prices go up, then maybe the playing field will be equal. Maybe then people won’t find imported unlocked phones so expensive after all.

  38. @jamar0303: In what possible scenario will they drop in price?

  39. AlexPDL says:

    @parrotuya: Uhm that’s kinda one sided. What did you want a fat check? The PLaintiff’s lawyers took the risk and invested time and money to fight the good fight. Sprint cares about the $18 M and when the government does not want to step in it was those Plaintiff’s lawyers that got things done. Result = ETFs are now forbidden.

    Look, the Feds weren’t going to do anything to protect consumers here. So it was the plaintiff’s lawyers that got it done. The plaintiff’s lawyers are not going to do it for free and they are fighting very professional and very well paid defense attorneys (for Sprint).

    On top of it all, whatever fees the plaintiff’s attorneys got have to be approved by the judge.

    It amazes me that no matter how great the outcome is people alwas have it out for the attorney.

    OK that was my .2 cents.

    My disclaimers: I am a member of the bar. Do not take anything I write as legal advice. Get your own attorney.

  40. psychos says:

    @HonestNigerian:

    I actually have only good things to say about T-Mobile and bringing my own phone. I haven’t renewed my contract in about 3 years of being out of contract, and I generally buy my own unlocked phones since the latest cool phones often aren’t available in the US. T-Mobile will actually BACKDATE a plan, which is the key point by which they ingratiate themselves to me. (Note, this means only their “standard” plans, not their possibly better promo plans if you often need more minutes/messages/etc.)

    I generally stay with my $30/mo 300 min/100 message plan + $3.99/mo unlimited Internet (though I believe the latter is $4.99/mo now and that I’m grandfathered in.) If I am close to going over, I can call up T-Mobile and they will happily switch me over to the $40/mo 600 min plan or $60/min 1000 min plan, backdated. I then go online and set it up to switch back to the $30/mo plan (which is enough for me 80% of the time or so.)

    I’m not sure any other carrier will let you backdate plans without a contract extension. I’ve been out of contract with T-Mobile for several years as noted, but even when I was, doing this was not an issue.

  41. DashTheHand says:

    Does this mean someone can get an iPhone and subsequently cancel with no penalties now? Seems like its a massive loophole at the moment.

  42. scerwup says:

    I have an idea. I say let the companies keep their ETFs. But if they break the contract with you, such as, your service doesn’t work, they change the rates that were stated in your contract, or any of the numerous other things they try to do to cheat people, they then have to pay YOU an ETF for breaking their end of the contract. I bet it would stop all kinds of shady business practices from these POS’s

  43. Audiyoda says:

    @Silversmok3: Wow – talk about an Apples to Oranges comparison.

    An iPod and the XBox are not tied to a monthly service that requires the use of that product. You don’t need the iTunes music store to use an iPod – you don’t even need iTunes. You don’t need XBox Live to use the XBox – just some games you don’t even need to own – you can rent them at your leisure.

    While I do believe the ETF policies should be changed to include prorated rates and should not be included if you did not purchase a subsidized phone from the carrier – ETF do protect carriers from idiots who feel the need to buy a new handset every few months.

    If this and similar lawsuits stand we can all say goodbye to lowcost cellphones. While courts can force wireless carriers to cease ETF’s, they can’t force them to sell phones at a given price.

  44. ARP says:

    @DashTheHand: Probably not. AT&T would still charge it and the customer would have to sue to get it back. The court fees, etc. wouldn’t be worth it.

  45. arl84 says:

    I think No ETFs at all is a little too universal…

    Companies started using them as a way to recover costs from selling phones so cheap right? But they abuse ETFs by tacking them onto every possible contract they can, even when it’s not used to recover costs. This is why ETFs are a problem. Was it not possible to rule that ETFs are only allowable in situations where a subsidized phone is part of the deal?

  46. invader-zim says:

    how can a non-california resident use this to escape from a contract with a company that delivers poor service?

    surely there’s a way… whether it’s to claim you’ve moved to california, or to lean on their law in some way…

    the situation doesnt apply to me. the alltel service that i have has been flawless and is well priced.

  47. acquaroyale says:

    There seems to e a bit of confusion as to the whole point of the lock mechanism of cellular phones, of which the subsidy is only one.

    If Company A sells phone X at $299.99 upfront @ 19.99/month, and Company B sells the exact same phone for $19.99 @ 29.99/month with a two year contract, we’re all pretty much agreed we know where your average consumer is going to go.

    [Insert cost-benefit analysis here]

    The point of the subsidy lock, which is included in the GSM spec, is to encourage consumers to purchase equipment they normally could not afford outright.

    The contention that this ruling will in any way drive down the prices of unlocked phones is absurd. An unlocked phone on eBay is about what you’ll pay for a grey-market Hong Kong kiosk job.

    My advice is, avoid Sprint/Nextel and Verizon like the plague (the technology is DAID), get yourself an unlocked GSM phone, and wait out your contract. AT&T knows my phone is not one of theirs (“It says your phone is from Bulgaria”)

    Personally, I’m happy with AT&T, but st least I have the option to switch to T-Mobile. Or move to Europe. Or the rest of the world.

    On another note, bad reception is in itself not enough to warrant waiving an ETF.

    Model A from Manufacturer B may work well, while Model B from Manufacturer A may not, depending on a myriad of factors, including, but not limited to, high-power transmission lines, inclement weather, topographic reflectors, building construction, choice of clothing (I’m not kidding,) etc.

    And good luck getting the “Van” to come out and take signal readings. They do it weekly anyways.

  48. acquaroyale says:

    On another note, I’d be more upset at the frequency locking the FCC has foisted upon me, as a consumer.

    Case in point: I want a 3G iPhone.

    Problem is, even if I pry the subsidy unlock codes out of AT&T (fat chance,) or jailbreak the thing, if I switch carriers, basically what I have is first generation iPhone, since the FCC decided to auction off one chunk of spectrum to AT&T, and another to T-Mobile.

    In other words, “3G” phones in the US are worthless on other carriers for which the phone was not designed, and even more so if you happen to travel.

    Your tax dollars at work.

  49. Trai_Dep says:

    To those thinking $20m is chump change, keep in mind that CA is one of 50 states. 49 more to go.
    @nequam: Genius. All this time I was too mentally lazy to think of the fact that there’s no way the telecoms buy their phones at a substantial discount. Good call!

  50. psychos says:

    @highland04:

    This is a good point you bring up. I have roamed in CA with my Sprint EV-DO card quite a few times in the past. They may or may not be violating the law on this point; but I will certainly call Sprint in the next few days citing this precedent, and ask to have to have my contract terminated. (Note that I do not actually want to cancel my Sprint EV-DO service at this point, but it’s certainly in my best interest if I no longer have a contract with them in case I do decide to cancel.)

  51. acquaroyale says:

    Oh for crying out loud, there is a difference between bulk purchases, and locking a subscriber into a contract to subsidize the cost of the radio handset (which is all a cellular phone really is)

    If you don’t understand the basic concepts of finance, or law, go buy a Walmart special.

    Once again, The Consumerist just posts crap articles for revenue via hits.

    Hey, where are my rights against The Consumerist? Given it’s current background, I should have a case, no?

    Correct, I have none.

    Quit your bitching, and go look up contract law.

  52. acquaroyale says:

    Does anybody here understand the industry of wireless roaming contracts?

    Whether you know it or not, your carrier has vendors that lease the lines.

    And if you’re roaming on EVDO, that means crap.
    Sometimes I roam on EVDO in *Central America,* and sometime I don’t.

    If you have no problem hanging out on rooftops, more power to you. The fact remains, your personal experiences with cell phone service with respect to signal strentgh are irrelevant, unless you want a tower in your front/back yard.

  53. jamar0303 says:

    @XianZhuXuande: You must have misunderstood. I’m talking about perception- if domestic-market phones rise in price, then imported phones won’t seem so expensive in comparison, not that imported phones will get cheaper.

  54. jamar0303 says:

    @acquaroyale: No, the only reason to avoid Verizon/Sprint is because the providers are crap- the technology is quite fine (look where Japan’s taking it).

  55. @balthisar: Actually, you are trying to connect your personal opinion with California law. What’s the connection? None.

    Blame the victim types like yourself never quite connect the dots. You can make the same argument for the corporations. Stop whining, big companies. Follow the law and you won’t lose cases. Don’t ask us to solve your business problems if you can’t hire a good lawyer to figure out how to operate without breaking the law.

    What’s that, Mr. Blame the Victim? It’s too confusing for the big rich corporations to follow the law? It’s too hard for companies with teams of lawyers to write legal contracts? Whaaaaaaaat? Boooo hoooo, the big corporations are so sad? Booo hoo, we better run to Washington and make it easier for the big rich companies to operate – it’s just so hard for them. Waaaah, big company, waaaaaah.

    I mean, you actually mention the mortgage crisis, LOL and forget to mention that the companies knowingly lent money to millions of people who had shoddy credit and no documentation loans? WAAAAAAAH, poor companies who gave out risky loans!! It isn’t fair that their business plan of lending money to morons didn’t work!!!!!

    I CRY BITTER TEARS FOR CORPORATE AMERICA.

    You blame the consumer for not reading the contract but not the company that wrote it?

    It’s the same difference.

  56. doctor_cos wants you to remain calm says:

    @AlexPDL: “The PLaintiff’s lawyers took the risk and invested time and money”
    Because they saw this as being potentially rewarding in a fiscal sense.

    “On top of it all, whatever fees the plaintiff’s attorneys got have to be approved by the judge.”
    Who is in all likelihood, also a lawyer. This is much like the arguments for mandatory binding arbitration.

    “It amazes me that no matter how great the outcome is people always have it out for the attorney.”
    Then, as a representative of the species, do something about it. Show us stories about lawyers refusing to take their big chunk of a settlement because the CLIENT can better use the money or refusing to pursue ludicrous suits. And explain why PAID attorneys defend the truly guilty?

    You will have a difficult time defending lawyers in general as human beings let alone misunderstood victims of misguided public opinion.

    I would have submitted this sooner but I wanted my attorney to make sure it would not be construed as a ‘personal attack.’ :)

  57. doctor_cos wants you to remain calm says:

    My post above is not to incite anyone, just to argue that in cases like this, the only ones who make out are the attorneys.

  58. Scuba Steve says:

    It’s good to see ETFs go, these small hunks of plastic were costing the phone company $20 bucks more than they were offering with the 2 year contract.

    Not to mention requiring a 2 year contract with the iphone.. outright profit for them, no subsidizing at all.

  59. jaybeas says:

    ETF-related question:

    My Sprint contract has an “expiration date” of August 3rd, 2008. Does this mean if I go to another carrier on August 3rd and port my number, my Sprint account is canceled without an ETF? Or do I have to wait until August 4th?

    Do I have to affirmatively tell Sprint that I do not want my contract renewed? They can’t legally renew it without my actual consent, right?

  60. PinkBox says:

    @InfiniTrent: I’d much rather pay the full cost of my phone than get stuck in a two year agreement. Especially an agreement that they like to extend if you make the slightest change to your plan.

    Oh, you’d like to add more minutes? We’ll need to extend your plan by another year!

    If you can’t afford a $300 phone, then buy the one you CAN afford.

    If anything, it might be nice to have a choice in the matter. If someone wants to sign a two year agreement in exchange for $150 off of a phone, let them. If someone would rather pay full retail on the phone, let them.

    Win-win, except for the phone company itself, I suppose.

  61. Voodoopunk says:

    @twophrasebark: balthisar is absolutely correct in this case. Everybody that wants out of their contract is not a “victim.” Those who don’t receive the service the contract stipulated they would receive (as bathisar mentioned) should be able to avoid a termination fee. But, as an adult, if you sign a contract, you should expect to honor that contract. People need to start taking some responsibility for their actions.

  62. snoop-blog says:

    I’m a sprint-lover. Sorry. In the area I live in (bfe) they are the best.

  63. I said it before, I’ll say it again… buy a phone on E-bay and activate it. If your phone breaks when still in contract, buy one off of ebay and activate it. NEVER GET A PHONE FROM YOUR COMPANY, EVEN IF IT’S FREE! It’ll come with more hassle than it’s worth, with contract extensions. I’d rather pay $60 out of my pocket right now for a phone than to spend another year locked into a contract.

    And P.S.- if you buy one of those cheapie free phones when you start a contract with someone, never mind the insurance. It’s crap, and the deductible costs more than the phone… ON EBAY. (Or any other online buying source)

  64. henrygates says:

    I wonder how far reaching this goes. ETFs don’t just apply to cellphone contracts. Cable companies, electrical providers, and other services often have contracts with early termination fees as well.

  65. alstein says:

    @balthisar:

    It should be illegal due to inequity in market power. That’s an established legal precedent.

  66. ARP says:

    Geez, so much churn for such a simple concept-

    Subsidized phone- OK to have contract with ETF. They need to get their money back. Now, what that ETF should be is another matter (flat fee, remaining unpaid value on phone, etc.)

    Non-subsidized phone- or “weak” subsidized phone- small or no termination fee.

    Something some have not considered is pricing discounts. If somebody buys something in bulk, you give them a discount because you make up the lost margin by volume. So carriers may have to raise their prices because they don’t have the “annuity” of you two year agreement. Also, they will have a huge problem “booking a sale” under GAAP since we can quit at any time.

  67. cf27 says:

    @henrygates: I have not seen the decision yet, only the write-up, so don’t take this for more than it’s worth. The law is not new — it just enforces an old law against companies that were ignoring it.

    Here’s the deal: “penalty clauses” in contracts are illegal as a matter of public policy — you can’t write a contract that says “you agree to mow my lawn, and if you don’t, you have to pay me $1M.” If somebody breaches a contract, then the other side gets their actual damages–what they lost in the deal–but nothing more. Now, it’s possible for both sides to agree, in advance, on what a good approximation of those damages would be, just to avoid an argument later. This approximation is called “liquidated damages,” and is not considered to be a penalty clause.

    In this case, it appears that Sprint was saying “Look, we subsidized the phone and had all these other costs,” but the evidence showed that the average subsidy per phone was $14. Since that’s not a good approximation of actual damages, it wasn’t liquidated damages and was a penalty clause.

    I have my doubts that this is correct, because Sprint also lost out on all the future profit from that customer — once somebody subscribes, the marginal cost of supporting them is practically nothing. Over a 2-year agreement, a $50/month service contract would mean $1200 in profit; a $200 ETF actually seems pretty fair.

    Anyway, if an ETF is not an approximation of actual damages, then it is probably illegal, whether it comes from your cellphone provider or landscaper. You may need to take them to court to convince them, though.

  68. RodAox says:

    well in these contracts doesn’t the phone company has a way of breaking them with no repercussions. I remember reading a few stories here that the service provider canceled a subscribers contract due to not making money off the guy… he was free roaming too much. if its a two way street then enforce the ETF however with this in mind, they should provide at least half decent service which in this case sprint sucks…

  69. snoop-blog says:

    @Voodoopunk: The problem is that most of the customers didn’t sign a contract after the first one. All they did was pay a bill and that was enough alone to claim the signed another contract. Change your plan, and the same thing.

  70. hardtoremember says:

    I paid an early termination fee with sprint 2 years ago when I added a line upgraded and extended my contract another 2 years.
    They tried somehow found over $1800 of extra charges to put on my bill! I fought the charges, cancelled the 2nd phone and then gladly paid the $250 termiation fee that I signed on for.
    I signed the contract so I paid.
    They tried this with my wife on her phone but she never extended her contract. We fought that and did not pay.

  71. coren says:

    @audiochick: I hope they don’t – ETF is about the only way they can offer phones for cheap. I’d rather be locked into a phone contract than pay hundreds of dollars to get a new phone if something happens to mine.

  72. Imaginary_Friend says:

    @nequam: Exactly right. Sprint got handed their ass in court and I can’t wait for the ripple effect to hit all of the other companies that have been gouging consumers with exorbitant cancellation fees. Grab your ankles, DirecTV and Dish! The party’s over!

  73. Graverobber says:

    Does anyone know if this ruling is phone-only, or does it also affect cable and satellite service?

  74. dangermike says:

    $200 to terminate the contract, yet when mine ran out, their offer to extend the contract was a $70 service credit with no new phone.

    BTW, I’m on T-mobile pay-as-you-go now. I spent $300 on a really nice phone and my airtime charges have been approximately $5.50 for the each of the last 2 months. That’s compared to $40-45 for a typical month on my sprint plan, the cheapest one they offered. Even if my usage were to mirror the heaviest months with sprint, the t-mo-to-go will cost about $28 where sprint would have charged around $60. The phone will pay for itself inside of a year. And I could have saved a lot more if had opted for a used phone or much less flashy model.

  75. notque says:

    Wireless networks should be run by the population. They are a publicly owned entity, and there should be no corporate control of any public space.

    They should be able to cell phones, and that’s it. Everything else handled by a union of the public.

  76. ARP says:

    @notque: be careful, lest you be branded a pinko.

    I partially agree with you. I think the Bandwidth should be owned by the people and leased, allocated, etc. to phone companies for use. They can compete on phones, service plans, etc.

    I feel that way about any service with wires. The people (government should own the wires), the companies can then use the wires to offer competing products. This creates a level playing field where all companies can compete and can’t lock each other out by taking advantage of a monopoly in cables.

  77. .
    Problem for the ‘Personal Responsibility’ crowd & the Spring Defenders: It’s not a valid binding contract.

    Not every contract a company puts in front of you is a valid one. Just because corporate attorneys write something, it’s not necessarily allowed in the United States. For example, you could not contract to rent your kid to someone. That would be evil. ETF provisions are evil.

    This has nothing to do with “personal responsibility,” but it’s always nice to hear from those folks, especially since it’s always done with a whiff of superiority. Love ya. Mean it!
    .

  78. jimv2000 says:

    “@Alipaps:
    “My parents called Sprint the day before their contract ended to tell them they would not be renewing the contract.”

    Why did they call to tell Sprint that? Do Sprint plans not automatically go month-to-month when the contract expires?

  79. AlexPDL says:

    @doctor_cos:

    When referring to a Judge you said… “Who is in all likelihood, also a lawyer. This is much like the arguments for mandatory binding arbitration.”

    Yes judges are lawyers. No… judges don’t have unbridled discretion to approve settlements. I have no idea what your argument is on mandatory arbitration. Arbitrators are just lawyers and you are right binding arbitration is not a great consumer protection mechanism.

    @doctor_cos: “Then, as a representative of the species, do something about it. Show us stories about lawyers refusing to take their big chunk of a settlement because the CLIENT can better use the money or refusing to pursue ludicrous suits. And explain why PAID attorneys defend the truly guilty?”

    Wow! Where to start? Why should lawyers always work for free? Do you see every emergency doctor saying uhmmm look I have a family but what the heck its on me. Ludicrous suits are prevented by law, frivolous suits are tossed out. Do some make it through sure. Stories on pro bono success are everywhere. From civil rights to human rights a lot of legal aid gets put out by lawyers, for free.

    Defend the truly guilty? It is not a lawyer’s job to determine who is guilty and who is not. Everyone deserves top representation. That is a fundamental right built into our system. It does not happen all the time but representing everyone is a key goal.

    Even the “guilty” need representation.

    @doctor_cos: “You will have a difficult time defending lawyers in general as human beings let alone misunderstood victims of misguided public opinion.”

    Wow OK. Calling lawyers non human? Ghandi was a lawyer, Lincoln was a lawyer…etc.

    Im not going to defend every lawyer. That would be silly. The same way you wouldn’t defend every doctor. But I also wouldn’t make blanket assertions about an entire profession.

  80. BoilerBob says:

    @Cranky Customer: “ETF provisions are evil.”

    Ok Cranky, I’ll bite. I’m having trouble comparing renting my kids with a fee for phone service. What exactly makes ETFs evil?

    I’ll agree that tricking people into signing contracts is evil but I knew signing my contract was me agree to pay them X dollars per month for the next 24 months or I’d be breaking the contract. No one made me do it.

  81. doctor_cos wants you to remain calm says:

    @AlexPDL: “No… judges don’t have unbridled discretion to approve settlements.”
    Maybe not unbridled, but certainly the bigger part of discretion.
    “I have no idea what your argument is on mandatory arbitration.”
    The argument would be that the arbitrators are the biggest proponents of arbitration, much like much of the reason people need lawyers is that the laws and procedures are written by…other lawyers.
    “Why should lawyers always work for free?”
    Why should lawyers get the lion’s share of these settlements? Where do I say lawyers should get nothing?

    “Ludicrous suits are prevented by law, frivolous suits are tossed out.”
    This would not seem to be the case in recent history. $54 million for a pair of pants…need I say more?

    “From civil rights to human rights a lot of legal aid gets put out by lawyers, for free.”
    An excellent point.

    “It is not a lawyer’s job to determine who is guilty and who is not.”
    I fail to see how in good conscience, you could represent some lowlife whose guilt you had direct knowledge of (i.e., a confessed killer who has second thoughts about facing the consequences of their actions).

    @doctor_cos: “You will have a difficult time defending lawyers in general as human beings let alone misunderstood victims of misguided public opinion.”

    “Calling lawyers non human?”
    Only a lawyer would argue that the statement ‘defending lawyers in general as human beings’ is calling them non human. It is an implication, not a definition. (It depends on your interpretation of the word ‘is’ :)

    “Ghandi was a lawyer, Lincoln was a lawyer…etc.”
    So were Paul Fitzgerald and Irving Kanarek (who represented Manson) and the guys who defended the Enron criminals. Much like any profession, you have the good and bad.

    “But I also wouldn’t make blanket assertions about an entire profession.”
    Why not? Insurance companies do. About doctors.

    Good and salient points on both sides. Please do not take offense, as I intended none and have enjoyed the discussion. Of course, you being an attorney, I expect this is billable :)

  82. qrius says:

    I’m in CA and with sprint. does this mean I can jump ship without a charge? What’s the actual process to do this? I don’t imagine that sprint stores will actually be allowing this when I walk in.

  83. chaosphoenix says:

    To everybody complaining about how because of this, phone prices will be jacked up to compensate for this lack of income: wouldn’t this cause phone manufacturers to start pricing phones at a more affordable rate? Right now, they can price them however the heck they want because most consumers don’t ever pay that price. All they see is “Retail Price: $999 Price With Contract: $50″

    I was recently talking with a friend, and she told me she got her GSM phone, new, without a contract, for $75 including tax and shipping from an overseas company. That was a pretty decent phone (an LG model, looks sorta like the chocolate, not slider though) for only $75. Last time I checked, if you wanted to join AT&T or any carrier and get their CHEAPEST CRAPPIEST phone, without a contract it would cost you somewhere in the neighborhood of $100-200 (free with a 2 year contract of course).

    What I see from this ruling is that, if companies don’t charge ETFs, yes the prices of phones will jump, but those inflated prices are sure to come down.

  84. BrandiLaevinus says:

    It enthralls me to hear this. When we were originally with Sprint, we had so
    many problems with them that we were literally calling in every month to fix
    surcharges (charged for SMS messages when we had blocked the service,
    “upgraded” to more minutes without anyone on the account ever speaking to a
    rep, charged for data — mobile browser, I assume — when that also was
    blocked, and various other things, though those three happened repeatedly).
    So eventually we said “screw it, we’re switching to [redacted]” and called
    to cancel. We’d had their service for nearly three years by this point, so
    we were well beyond the range of cancellation fees… or so we thought.
    Apparently, in their book all those fixes we made to their errors counted as
    “plan changes”, thereby extending our contract to two years from the time of
    any individual change (of course, they never notified us of that as they are
    supposed to). After about another month of trying to fix this, bashing heads
    with CSRs and generally getting nowhere, we ended up cancelling. Of course,
    they slapped us with a $1000 charge, which we did not pay. After about a
    year of hourly employees being tasked with attempts to collect this fee, we
    finally got a call from a CSR with actual ability to look at the history.
    Thankfully my father was in the habit of documenting EVERYthing, so we were
    able to show where Sprint was at-fault and the charges (and associated late
    fees) were removed and we haven’t heard from them since… well, except
    their offer of a free year’s worth of service for our trouble. We looked at
    the fine print on that. It would have roped us into another contract. This
    one was six years. We politely told them to “f— off”.

  85. Nekhebet says:

    So what do we do when they’ve sold our “debt” to a collection agency?
    Sprint kept changing my contract without my consent a couple of years back, and reupping my time with them in doing so. So I left. Then they said I owed them money, which I refused to pay.
    Fast forward a year or two, and a collections agency is demanding the ETF plus interest.
    Will this ruling help me? Because that is eating up my credit report, which didn’t need the ding for something so stupid =(