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11/5/2008
07:32 PM
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Sprint Facing $1.2 Billion Class-Action Lawsuit

The suit claims that the company's early termination fees violate laws in several states as well as the Federal Communications Act.

Sprint Nextel is facing a $1.2 billion class-action lawsuit over claims that it wrongly charged customers early-termination fees.

In July, a California judge ruled that the third largest U.S. wireless carrier had to pay $73 million over these cancellation fees. The attorney in that case, Scott Bursor, has now filed a federal lawsuit which claims the $150 and $200 fees violate laws in every state as well as the Federal Communications Act.

"After a full trial on merits, we proved that Sprint Nextel's termination fees violated California's law," Bursor said.

But Bursor may be jumping the gun a bit, as the California ruling is not final. A California judge will hear arguments from both sides Thursday, and a final ruling is expected within 90 days.

Sprint has not responded to press inquiries regarding the national ETF lawsuit, but the company did recently finalize a new pro-rated ETF policy. The mobile operator said its $200 fee will be reduced by $10 per month after month six. The adjusted cancellation fee will only apply for new contracts, but existing subscribers can get it by renewing their service agreement.

All four major U.S. wireless carriers have a cancellation fees, and nearly all of them have faced multimillion-dollar lawsuits over them. The mobile operators say these fees are crucial in recouping costs of heavily-subsidized handsets, but consumer advocates say they are overly punitive and stifle consumer freedom to switch carriers.

The Federal Communications Commission has even leapt into the discussion, and is mulling a plan to create a nationwide policy.

"While I'm respectful of state regulators, I have been skeptical that lawsuits are a good way of ensuring protection for all consumers," said Kevin Martin, the FCC's commission chairman.

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