Pay Your Early Termination Fee Or Get A Black Mark On Your Credit Report

A cell phone provider’s early termination fees isn’t a polite suggestion — it’s a contractual payment you’ve agreed to give to the company for failing to stick with its unsatisfying service. Whether or not the agreements are ethically valid, you’ll have to pay them or face collections and a likely scar on your credit report.

Take M’s story as evidence to the fact:

A few years ago, Sprint wouldn’t replace a phone that was damaged even though I’d purchased insurance.

As a result, I switched carriers and didn’t pay the early termination fee. I figured that it was Sprint who was causing the cancellation of the contract by not honoring the insurance.

They sold the debt to a collection agency and now the collection agency has listed it on my credit report. I had a lawyer write a letter to the collection agency but that went nowhere. I challenged the charge on my credit report but that didn’t remove it either.

A court in California ruled that Sprint illegally charged early termination fees and Sprint entered into a nationwide settlement to preclude additional litigation, however that didn’t help people like me whose accounts were turned over to collection agencies. It is not Sprint who is reporting to the credit agencies, but the collection company that bought the debt.

What, if anything can I do (besides pay the early termination fee)?

What have you told a cell phone provider to get it to let you out of an early termination fee?


Edit Your Comment

  1. digital0verdose says:

    I say provide me with service and support that compels me to stay with your company rather than you being complacent about your inability to serve and support and forcing me into a contract.

    • A.Mercer says:

      Yep. Whenever I see a company say they require a contract of a specific time period I automatically think “Your service sucks so bad you have to trap people with a contract.”

      • domcolosi says:

        It’s really more like “This phone sells for 400 bucks, but we’ll sell it to you for 100 if you promise to be our customer for 2 years”, isn’t it?

        • digital0verdose says:

          If they trusted their service and support enough, why need such a guarantee. That BS pricing on phones is so they can make you think there is another reason for the contract.

          There is no way in hell an LG Envy, even with 100% mark-up, should costs you $300; yet in their little cost breakdowns, it does.

          • Corinthos says:

            Yeah there is no way just look at the phones on ATT Go Phone network compared to the same phone for ATT before contract. Most the time over $150 cheaper.

          • Nigerian prince looking for business partner says:

            “If they trusted their service and support enough, why need such a guarantee. “

            Because I could buy a subsidized phone for $99 and then immediately cancel my service and then resell the phone for $400.

    • incident_man says:

      Then go out and pay full retail price for a phone if you don’t want the contract, or go prepaid. Seriously, if you expect a cheap price for a phone, then there’s a consequence for that and it’s called a contract. Last time I checked, it costs money to make things.

      • speedwell (propagandist and secular snarkist) says:

        That, in fact, is exactly what I did, and I’m glad I did. The fellow who sold me the unlocked phone I have now also removed a couple of functionality blocks that some carriers apparently install by default. My phone usually gets much better reception (more bars) than other peoples’ in the same places now.

      • skrilla says:

        Too bad you have no choice but to sign a contract for some phones and services – even if you do pay full price for the phone. Try to activate an HTC EVO 4G on Sprint without entering into a 2 year agreement – it can’t be done. I know because I tried several times.

  2. Beeker26 says:

    Don’t worry about it? Seriously. A small ding on your credit report isn’t going to hurt you.

    • msbask says:

      Is an open collection account on your credit report really that small of a ding?

      • Beeker26 says:


      • speedwell (propagandist and secular snarkist) says:

        Jesus, imagine you were me, with no credit cards, one illegitimate medical bill currently in dispute (hospital charging for services they did not provide), and one low-dollar signature loan about to expire. One black mark could tip the whole featherweight thing into the Dark Side.

        • Beeker26 says:

          Not really. If you don’t care enough about your credit to foster it then you really shouldn’t care about putting a ding in it either.

          • speedwell (propagandist and secular snarkist) says:

            I care too much about my solvency to worry about my ability to avail myself of the non-privilege of being in debt, moron

            • craptastico says:

              namecalling? really? grow up and good luck trying to get a mortgage someday, or getting a landlord to rent to you. although from your attitude i guess you’re probably ok with living with your parents until you’re 30

          • pot_roast says:

            We are now ineligible for a FHA streamline refi because of one new collection on my wife’s credit report. It was from Verizon Wireless, and we’ve been fighting it for several years. It goes away and then pops back up again with a different collection agency.

            It’s like whack-a-mole with these slimebags.

    • runswithscissors says:

      What?!! Anyone with a less than perfect credit score is scum of the earth and if anything bad happens to them – ever – they deserve it and are to blame.

      / High-Horse Comsumerist Commenters

      (and yes, it’s sarcasm)

    • sleze69 says:

      Verizon Wireless tried this crap with me about 7 years ago. Oh look, it’s off my credit report.

      • Beeker26 says:

        The statute of limitations varies by state, but the average is 6 years. Then poof! it’s gone forever.

        • trellis23 says:

          Unless the collections agency sells it to another collections agency, and then it starts over on the limit from when it was bought.

          • Abradax says:

            No, it doesn’t.

            You can’t reage a debt. The statute runs from the time of the original debt, or when it has been affirmed by you.

            • Beeker26 says:

              Correct. But that doesn’t stop some agencies from trying to get you to pay anyway. Sometimes you have to “remind” them the debt in question is no longer valid.

              It’s also very common for the harassment to sharply escalate shortly before the debt is due to expire. It’s their last-ditched chance to get you to pay before it goes poof.

            • BobOki says:

              It is a PAIN to prove that they are reaging. For instance, I have a debt on my credit right now, from sprint, which says I owe $450. Now it has jumped between three different credit agencies, each one putting a hit on my credit report…. for a debt back in 1999, which I might add never existed.
              I have service again with Sprint (loved their service it was billing that sucked back then) and have made sure that everything was ok, they even have called the creditors to inform them that the debt from 1999 never existed and they should stop trying to collect. I have sent certified mail to the credit agencies asking for debt verification, and I have disputed it on my credit reports, each time coming back as verified debt. I do not understand how a 10+ yr old debt can still have 4 years by 4 companies on my credit report, but evidently it “meets FCRA regs”. Any advice on this?

  3. ryoko says:

    >>however that didn’t help people like me whose accounts were turned over to collection agencies.

    Couldn’t you send a certified letter to the collection agency to have them return the debt to Sprint?

    • Jasen says:

      If the CA has been consigned the debt, sure. But if they actually purchased it, they now own it completely. There is no giving it back. This is how charged off zombie debts live on for years and years… CA’s keep buying and selling the accounts to each other.

  4. ihatephonecompanies says:

    IANAL of course, but why can’t you sue the collection agency for libel or something similar? If they can’t prove that you owe them money, aren’t they somehow defaming you by reporting a non-payment to the collections agency?

    • frank64 says:

      But as to the contract you do owe them the money, and you can’t sue for the truth.

      But, I think it is really too easy to have something added to your report, and if you dispute it with the cell company, they should not be able to put it on until it is resolved.

  5. speedwell (propagandist and secular snarkist) says:

    I’m just a contrarian, but when cell phone providers first came out with the multiple-year contract crap, I said I’d never fall for it, and I never have. I own a perfectly good unlocked phone and I use prepaid service. I probably pay about seven dollars a month total for minute refills, even at inflated prepaid prices. And if I get sick of it I can shred the SIM, ditch the phone, and walk away without losing anything but an average of ten dollars worth of remaining minutes.

    It’s a constant source of amazement to me why people agree to be locked in to a vendor for years on end. Not me. If a provider fails me, I want the unconditional right to fire them.

    • apple420 says:

      Does that let you send thousands of texts for months? Spend hours on the phone? Unlimited data? I hate contracts, but I’d hate to see my bill if I went prepaid. I could cut my use a lot, but I’ve grown accustomed to certain perks. Plus the two phones I carry around (personal and business) would have been $1200 without a contract.

      • speedwell (propagandist and secular snarkist) says:

        Thousands of texts per month? Unlimited data? What did I buy a 3G/Wifi Kindle for? (Kindles don’t have contracts, either.)

        • speedwell (propagandist and secular snarkist) says:

          Ok, so I don’t have texting from the Kindle. But it has speakers and Internet access, and I have a gmail account from which I can make calls…. uh… (looks very hard at cell phone)

        • bsh0544 says:

          Are you suggesting a Kindle is a suitable replacement for a modern smartphone?

          • speedwell (propagandist and secular snarkist) says:

            No, I’m suggesting it’s an adequate make-do for my existing old-school KRZR K1. Really, I’d rather not even have a cell phone at all, but you can’t very well get along without one these days.

        • apple420 says:

          Yes on my family plan (3 lines) we send/receive several thousand texts per month. Everything from conversation to emergency notifications on my work phone. I don’t use many minutes myself, but the other user on my plan does (maybe 1200 minutes a month total). As for data, I have been using around 2 GB per month using video chat and some tv show streaming.
          I’m sure there are many people where prepaid is the right choice. I wish I could get a cheaper plan, but I certainly use a lot of features.

          • speedwell (propagandist and secular snarkist) says:

            Fair enough. I’m single and my cats don’t know how to dial a phone or text.

    • RayanneGraff says:

      I’d love to go prepaid. I have an unlocked HTC HD2 with a dual boot windows mobile/android system & I hate paying $70 a month & having a 2 year contract.

      BUT- I have yet to find a prepaid plan on a compatible network(my phone’s radio hardware won’t work with AT&T’s 3g. Something about frequencies, so they’re out) that offers unlimited data/texting for any less than I’m paying on contract now. I use maybe 100-200 minutes a month, but I am a texting hoor who gobbles up data like sweet, sweet candy.

  6. Joe P says:

    In order to get out of that early termination fee, you have to prove that you are not receiving an adequate signal at home address of your account. i ran into a similar issue with t-mobile. every other major carrier (at&t, verizon, sprint) had excellent service in my office building, but t-mobile only reached a tower if i was standing next to a window. i complained and that was their answer. i said “ok – change my home address to xxx (office address).” the rep said ok, but they would do a diagnostic check on the nearby tower. of course, whatever “check” they performed indicated that the tower was in perfect working order. the early termination cost me $250. luckily, i had just upgraded my phone and was able to sell it on ebay to cover that cost.

  7. smo0 says:

    I just want to see laws making it MORE difficult for companies to turn over their collections to 3rd parties…..

    • DariusC says:

      THIS! I think the practice should be illegal. If you enter into a contract with sprint, sprint should require your approval to sell the debt to someone else… Since you entered into a contract with sprint, sprint should be responsible for collecting the debt (And dinging your score).

      Debt collectors should be OUTLAWED PERIOD

      • TuxthePenguin says:

        Sure, lets outlaw debt collectors. Ignoring the fact that suddenly lots of people lose their jobs in the short term…

        You ready to see the legal system get even more clogged? Instead of sending the bill to collections, they’ll just go down to the courthouse and implement legal means to get you to pay the bill. They’ll garnish wages, raid bank accounts… the final legal solution is not nice. Not to mention that you’ll need to show up and fight it in court… lost wages and time anyone?

        Debt collectors, at best, just delay that final legal solution.

  8. shepd says:

    Send a certified letter to the credit agency that you dispute the item on your credit report. Sprint will need to send proof that you owe the debt. You can then counter that with the proof that the debt is, in fact, illegal and then you win.

    The process will take time. Be prepared to let it run its course.

  9. Liam Kinkaid says:

    If you had insurance it wasn’t with Sprint, even though Sprint billed for it. It was probably through Asurion. Further, they’ll replace it for just about any reason, provided you pay the deductible. I don’t know the specific circumstances in OP’s case, but it seems like he’s either not telling the whole story or he was grossly misinformed by someone at Sprint.

    • mykie says:

      A consumer not telling the whole story? UNTHINKABLE!

      Next you’ll be saying that people on The Consumerist might leave out valuable details in order to manipulate their point and make it seem like they’re not to blame for their misfortunes!

  10. Angus99 says:

    I have that comic! Robocop wins.

  11. ElleAnn says:

    I got out of 2 year contract when I moved out of the country for 7 months. I guess that’s always an option.

  12. knoxblox says:

    Being a lot sarcastic here…but I think by the time all this bank/credit fallout mess is over and done with, nobody’s going to have a great credit score and the lenders will have to lower their standards to stay in business.

    • Beeker26 says:

      Or they’ll just continue to deny us credit, forcing us to pay with cash. Which, as far as I’m concerned is a GREAT thing. No complaints here. Other than a house and *maybe* a car, if you can’t outright pay for it you shouldn’t buy it, emergencies excepted of course.

      • speedwell (propagandist and secular snarkist) says:

        Wait, weren’t you the idiot who was just blasting me for not having very much of a credit rating because I didn’t have loads of debt? Or was that your other personality?

  13. JGB says:

    I wouldn’t worry about it. I have occasionally told a company to go f**k themselves over a disputed bill/fee and, more than once, I have had a collection agency call me. I still get calls from a collection agent over a traffic fine from Florida on “my” Florida drivers license. They think that the fact that I was in Kansas that day and have, in fact, never had a Florida drivers license is “unacceptable” as an excuse. They also seem to have a hard time understanding that threatening my credit rating is not the same as, oh, holding a gun to my dog’s head (I love that dog). My credit rating is quite good. It takes more than one vindictive cell phone company to condemn you to a lifetime of financial purgatory

  14. Extractor says:

    Tracfone for almost 2 years now. I figured that for 136 minutes a month, it wasnt worth the $99 per month. My wife hated the tracfone and now has a Blackberry thru Tmobile, dont know how much that is. At all places other than the car I have either a notebook or a PC. December I paid $200 for 3000 minutes and still have over 1500 left. For me, it was a waste of $1200 per year. It works in Hawaii but not Canada, so when I go to Toronto I tell everyone to call my wifes #.

    • Extractor says:

      Blew up my phone in June when I was at the speedway and I had reversed the polarity on the charger adapter. Why are these so cheap? The slider phone was less than $30. Just cant retrieve the info from the sim card since both sim readers I ordered wouldnt install in Win 7 Pro X64. The readers were each less than $5.

  15. rjhancock says:

    Pull your credit reports and check the dates. I’ve eliminated about 3/4 of the negative on my reports simply because they mis reported the information. IE: Date of last activity is BEFORE date account opened.

    If they mis-reported it (happens more often than not), it must be PREMARITALLY removed from your report. IE: they can’t report it nor can anyone they sell the debt to. Check your states SOL laws though, they may be able to take you to small claims for it.

  16. mbd says:

    If the original debt is illegal, it does not matter who currently owns the debt. However, the court ruling mentioned above is only applicable in California.

    Never, Never, ignore a collection agency. The OP should have disputed the debt in writing as per the FDCPA, requiring the agency to provide proof in a signed agreement that you owned the termination fee. A friend did this with a Sprint ETF, and the collection agency went away and was never heard from again. Unfortunately for the OP, it is now too late to dispute under the FDCPA, so the burden would be on him go to court and have the charges removed. That would more expensive than it is worth.

  17. Extended-Warranty says:

    What we have here is another story without the facts. Did you have “damage” insurance? Did it fall under an exclusion?

    Look, big companies are not innocent. You can’t just do whatever you want and get away with it. You signed a contract that says you will pay the term fee, so pay it.

    I wish every business sold more debts to collections. Too many deadbeats and “smarter than the system” customers who think they can do whatever they want.

  18. TasteyCat says:

    Should have fought the fee when Sprint still owned it. They’re more likely to bow down to a BBB complaint or EECB, and even if they don’t you at least have a record that you disputed the charge.

    If you can’t get it removed through the dispute process, the collection agency may be willing to negotiate a pay for delete for a portion of the amount owed.

  19. Beeker26 says:

    But if you haven’t cared enough about your credit to foster it, then you shouldn’t care if there are any dings in it, right?

  20. aleck says:

    The “I figured it was Sprint’s fault” conclusion obviously was not shared by Sprint. You may have a legitimate claim with Sprint to replace your phone, but just dropping them without bringing the claim to a resolution is not a good idea. There is really not much to do here, pay the fee or get over the dinged report, learn the lesson and move on.

  21. ITDEFX says:

    Two years ago my area got hit with major thunderstorms. One day we got hit with a really nasty one that involved a tornado warning in our area. Something must have affected the towers because I couldn’t use my cell for 8-10 hrs. Service was restored but never at full service. Ever since then I have been getting dropped calls or no service in my area. Reported it several times to verizon and they did confirm a very low signal and high dropped call rate on my account. They gave me not only a major discount on my phone service, but gave me 100 bonus minutes for 2 years over my plan. They told me they didn’t know when it was going to be back to full strength or when a new tower would be built. I eventually moved out of the area and even two years later the tower has yet to be built. Now Verizon did offer me a clause in my account to allow me to leave without an ETF…so I can leave at anytime. :)

  22. sopmodm14 says:

    just like consumers can file chargeback, businesses can file charges

    if its unlawful, and you call them out on it, it shouldn’t be in your report (or at least its noted that the debt is disputed)

    i’m not sure , but i would counter that fraudulent marks like these should be fined

  23. Kevin says:

    I skipped out on an ETF almost 3 years ago. T-Mobile didn’t work in my area despite what their coverage map said. I told them as much and that by their own contract, I was free to depart. They wouldn’t agree but I wasn’t going to continue to pay for wireless service I couldn’t use, so I went to another carrier.

    If you have good credit otherwise, just don’t worry about it. I’ve bought a car and a house with such a blemish on my credit report. Remember, these of the days of people walking away from massive mortgages. Having an ETF on your credit report is almost laughable.

    • Kevin says:

      Damn, I forgot to add this: a good tactic is to wait for the ETF to go into collections. Once your carrier sells it off, you can usually settle for about 30% of the original fee. That’ll save you money and clear up your credit report quicker.

  24. Not Given says:

    I’d rather pay full price for a basic phone than sign another contract

    • webweazel says:

      Agreed. This would be one of those times when I would advocate the use of a credit card. Buy the phone outright so you would not need a contract. Even if you paid off the phone on the CC over a few months, you’d be paying FAR LESS in interest than their ETFs could ever be. The control is back in your hands, not theirs.

      Just don’t activate it at a store, as they’ll sneak you onto a contract anyway.

  25. Courtney Ostaff says:

    I had a similar problem with Sprint. I kept my copy of the contract, wherein it said what I would and would not be charged for, and sent it off to the state Attorney General’s office. About six months later, I got my money back in the mail.

    Use the Man to fight the Man, man!

  26. bostonguy says:

    When I tried to cancel my AT&T Wireless service back in (I think) 2004, they told me that I still X months left on my 2 year contract with them. I had apparently re-upped for a 2 year when I upgraded my phones at some point.

    I firmly told the woman on the phone that if she mailed/emailed/faxed the signed paperwork, I would send in a check for the ETF immediately. She insisted that there wasn’t anything signed, but there WAS a contract. I insisted that I would never enter into a 2 year contract for that amount of money (and all of the red tape involved) without SOMETHING on paper.

    After a few times back and forth, I finally got them to close my account and port my numbers, and managed to get out of paying the ETF.

    I imagine I’m one of the lucky ones that managed to escape like that…

  27. mitchsmith62 says:

    Send a demand letter, Certified Mail, Return Receipt Requested. Make them prove the debt is yours. Require them to provide you with a copy of the contract that you signed. If the can’t prove it, sue them in Small Claims Court.