T-Mobile To Prorate Cell Phone Termination Fees

Customers looking to leave T-Mobile before their contract is up won't have to pay as much. The company announced Monday it will prorate early termination fees.

For customers with 91 to 180 days left on their contract, the early termination fee decreases from $200 to $100. It decreases again to $50 if there are fewer than 91 days left. If customers end the contract in the last 30 days of their term, it will cost $50 or their standard monthly charge, whichever is less.

The policy goes into effect June 28, and new or renewing contracts starting after that date will be eligible, a company spokesperson said. The policy will apply to customers with a one-year or two-year contract.

Verizon Wireless was the first major mobile operator to prorate its early termination fees almost two years ago. Last October, AT&T announced its cancellation fees would start at $175 and be reduced by $5 every month over the life of the one-year or two-year contract. Sprint Nextel is also expected to prorate its fees by the end of the year.

The wireless carriers may have been prodded by growing consumer frustration with these fees. Last year, T-Mobile was sued in a multimillion-dollar class-action lawsuit over the issue, and Sprint was recently in court over its early termination fee policy.

The issue has also caught the attention of the FCC, which is mulling a plan to create a nationwide policy for cell phone cancellation fees.

"Too often consumers are surprised that the amount they owe on their first bill is not what they expected, only to then learn that their 'trial' period already ended and cancellation will result in paying the early termination fee," said FCC Chairman Kevin Martin at a meeting last month.