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8/13/2009
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Sprint To Settle ETF Suit For $17.5 Million

The class-action lawsuit claimed Sprint overcharged customers $1.2 billion in early-termination fees.

Sprint Nextel has agreed to pay $17.5 million to settle a class-action lawsuit regarding its early-termination fees.

The third-largest U.S. carrier originally was sued for $1.2 billion over its cancellation fees, just a few days after Sprint adjusted its ETF policies. The company will be putting aside $14 million in a common fund that will be distributed to class-action participants, and it will also pay $3.5 million in non-cash benefits like additional minutes or discounts.

Those eligible for the settlement include Sprint CDMA or iDEN customers who entered into a contract between July 1, 1999 and Dec. 31, 2008, and if their claim relates to the ETF. The settlement does not apply to government or corporate accounts, and more information on eligibility can be found on Sprint's Web site.

These cancellation fees have been a growing issue that is affecting all the major wireless carriers. The mobile operators argue these fees are necessary because they enable the companies to recoup the costs of subsidizing handsets. Consumer advocates say these fees hurt competition because it makes it difficult for subscribers to easily switch cellular providers.

Sprint denied allegations in the lawsuit, and a final ruling in the case is set for October. Sprint is not the only one facing legal issues, as T-Mobile, AT&T, and Verizon Wireless have all been sued over ETFs. To help alleviate these problems, all four major carriers have adjusted their cancellation policies to prorate fees based on how long a customer has had service.

Under the Bush administration, the Federal Communication Commission indicated it favored a nationwide policy over cancellation fees. It is unclear where new FCC head Julius Genachowski stands on the issue.


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