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

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.

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

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

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.

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

I'll bet they are!

I only hope Washington state follows suit...

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!

so will this spread to other states?

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.

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::

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

Now lets make this nationwide!

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.

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

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.

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.

@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.

@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.

@audiochick: and Arizona

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.

@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!

@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.

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.

@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?

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.

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.

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?

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

Not a Supreme Court judge, a Superior Court judge.

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...

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.

@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 .

@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."

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

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.

$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!

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

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.

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

@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.

@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.

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

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

@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.

@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.

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?

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.

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.

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.

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!