The attorney who won a verdict against Sprint in California has filed a $1.2 billion class action lawsuit, claiming that early termination fees are not legal. [Information Week]

Comments

Edit Your Comment

  1. steinwaytony says:

    Pretty sure they’re legal. Aren’t they just Sprint’s way of saying, “okay, buh-bye; now can you pay us for the ten-dollar phone we gave you three weeks ago? thx”?

    • strathmeyer says:

      @steinwaytony: No?

      How would you feel if you said, “I hate your company and will never do business with you again” and my reply is, “I guess it doesn’t hurt us to charge you $100, then”?

  2. keith4298 says:

    If the fee is not based upon recouping a loss, but in order to retain a customer that wants to switch, they are in material breach of section 2.

  3. Pylon83 says:

    The legality of the fees rests on whether or not they are actually representative of the damage Sprint incurs by the customer ending the contract early. Punitive fees, or fees designed just to punish, are generally unenforceable by the courts. If Sprint can prove that they suffer damage when the customer leaves early, the fee is valid. The problem is, in the CA case, the judge found that Sprint was unable to meet their burden, and that their subsidization claim was insufficient to justify the fees, thus making them punitive and unenforcebale. So if Sprint can get their sh!t together and produce enough data to convince a judge that they do suffer damage because of the phone subsidization, and that a $200 ETF if reasonable in light of that damage, they win. Jurisdictions vary on whether the contractual amount, the $200, has to be reasonable only at the beginning of the contract (fairly likely $200 is reasonable if the phone is heavily subsidized) or at the time of breach (harder if the contract is close to being over and the subsidization, in theory, has been paid back via fees).

  4. mrmysterious says:

    Prorated is the only fair compromise. For me, I left Sprint on Monday and will get hit with $200 for me and $200 from my wife. Oh, we went to AT&T to get iPhones.

  5. kc2idf says:

    I would like to propose a different approach to the whole thing. Think of it as a riff on the approach Dish Network used to use.

    Quick précis on what Dish used to do: They would sell the equipment at full price, then kick back a discount for the first year of service that ended up being a little bit more than the price of the equipment.

    Anyway, here is what I propose: Sell the equipment at full cost. Take what is now the price-with-agreement (if any) and use it as a down payment, financing the remainder for a period of one or two years, and then discount the monthly price of the service by the amount of the monthly payment for the purchase. In the end, everyone is made whole, the bottom line is the same, the ETF is gone, and the obligation to pay for the phone remains, even if the service is terminated.

  6. snoop-blog says:

    So how do I jump on board to get my $2.57 check?

  7. JadoJodo says:

    If you don’t agree to the contract, DON’T SIGN IT!