Government // Mobile & Wireless
News
5/15/2009
06:18 PM
Connect Directly
RSS
E-Mail
50%
50%

T-Mobile Looks To Settle Early Termination Fee Lawsuit

The suit was originally filed in August 2008, and it covered subscribers affected between July 1999 and February 2009.

T-Mobile is looking to put an end to a class-action lawsuit regarding its early-termination fees, and it proposed a settlement that could be worth up to $13.5 million.

The fourth-largest U.S. carrier is responding to a class-action lawsuit that alleges it broke federal and local laws by imposing a fee for users who terminate their contracts early. The suit was originally filed in August 2008, and it covered subscribers affected between July 1999 and February 2009.

Under the terms of the proposed settle, which has yet to be approved by the courts, customers who paid the fee will be compensated up to $125. Affected customers who were charged a cancellation fee but did not pay it or received a credit within 30 days are eligible for up to $25. The company estimates this could cost up to $11.5 million.

Existing customers who had the cancellation fee charged to their contracts will receive "noncash" assets, which could include extra minutes, text messages, or free Wi-Fi hotspot access. The total value of these assets is expected to total $2 million.

T-Mobile is just the latest carrier to have legal woes over its termination fees, as Sprint Nextel, AT&T, and Verizon Wireless have all been sued for their contract cancellation fees. The carriers say these fees are necessary to cover the costs of subsidizing cell phones and smartphones, but some consumer advocate groups say they are illegal and stifle competition.

The issue has even caught the attention of the Federal Communications Commission, and former Chairman Kevin Martin argued for a nationwide policy over these cancellation charges. Over the last few years, each of the major mobile operators has implemented a prorated policy regarding their early-termination fees.


Learn more about the issues facing cellular providers at TechWeb's Mobile Business Conference & Expo in Las Vegas, May 17-21. Join us (registration required).

Comment  | 
Print  | 
More Insights
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest - July10, 2014
When selecting servers to support analytics, consider data center capacity, storage, and computational intensity.
Flash Poll
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join InformationWeek’s Lorna Garey and Mike Healey, president of Yeoman Technology Group, an engineering and research firm focused on maximizing technology investments, to discuss the right way to go digital.
Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.