Sprint Loses 'Early Termination' Case, Must Pay $73 Million - InformationWeek

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7/29/2008
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Sprint Loses 'Early Termination' Case, Must Pay $73 Million

The ruling could be a bad sign for AT&T and T-Mobile, which are facing similar litigation.

A California judge ruled Tuesday that Sprint Nextel would have to pay $73 million in a class-action lawsuit regarding early termination fees.

The ruling is tentative, as Sprint will have about two weeks to come up with a response before a final decision is made in Alameda County, Calif., Superior Court.

"Now that the ruling is in, the outcome is clear," said Scott Bursor, an attorney representing the plaintiffs, to reporters. "We won this trial. And Sprint lost. Convincingly."

Representatives from Sprint said they are reviewing the ruling, which said former customer will receive about $73 million in refunds.

Customers are becoming increasingly frustrated with early termination fees, and are turning to the courts. AT&T is currently facing litigation regarding its cancellation fees, and Verizon Wireless recently settled its cases for $21 million earlier this month. T-Mobile has also been involved in lawsuits regarding this issue.

But the wireless carriers contend that these fees are necessary to recoup the cost of subsidizing handsets. Still, all four major mobile wireless companies have changed, or are in the process of changing their early termination fee policies.

The issue has caught the attention of the FCC's Commission Chairman Kevin Martin.

"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," Martin said in a meeting last month.

The FCC is mulling a plan to create a nationwide policy regarding cell phone cancellation fees.

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

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