Judge Rules Sprint's Early Termination Fees Illegal in California

[vivfox]

A judge in California has ruled that Sprint Nextel's early termination fees are illegal and said the wireless operator should pay back $18.2 million in collected fees to consumers, a decision that could help sway decisions on similar cases throughout the country.

The preliminary decision released earlier this week is a major blow to Sprint and to other phone companies in their battle to defend themselves against angry consumers who say that the fees imposed on them when they leave the companies' services are unlawful.

Verizon Wireless, which was also being sued in California, has already settled its case, agreeing to pay $21 million to settle all claims against the company. And after the decision against Sprint there's a chance that cases against T-Mobile and AT&T could also be settled.

Early termination fees have been around almost as long as cell phone service. Wireless operators impose the fees that can be as high as $200 per line on customers who cancel service before their contracts have expired.

Phone companies say that they must impose these fees to recover the cost of subsidizing handsets and for guaranteeing low monthly service charges. But consumer advocates don't buy that argument, and they say that the fees are excessive and restrict customers' ability to switch services.

Cell phone users fed up with these fees took their complaints to a California court and formed a class in a lawsuit against the four major carriers in 2006. The court separated the cases and has been dealing with them separately.

Sprint initially won the first battle in its courtroom war. Alameda County Superior Court Judge Bonnie Sabraw had further split the case leaving a jury to answer the question of whether customers had in fact broken their contracts with Sprint. In June, the jury found that indeed customers had broken their contract with Sprint. The jury found that Sprint customers had paid $73.8 million in early termination fees, while the company had lost $225.7 million.

But the judge herself decided whether or not the contracts were even legal. And earlier this week, Judge Sabraw issued a preliminary finding that stated these contracts were not legal. She ordered Sprint to pay $18.2 million to customers who had already paid these fees. And ordered the company to stop trying to collect the $54.7 million from other customers who haven't yet paid the charges they were assessed.

But it's still unclear if Judge Sabraw's preliminary ruling will stand. Both parties in the suit have an opportunity to file additional arguments to sway the judge before she issues her final opinion.

http://tech.msn.com/news/articlecnet...8764&GT1=40000

IMO It looks like it doesn't pay to operate a phone company any longer.