Friday, August 01, 2008

Early Termination Fees on Cell Phone Contracts are Now Illegal in California

In a huge story that could eventually change the entire cell phone industry, a California judge ruled that early termination fees are illegal and violate state law. The tentative preliminary judgement orders Nextel/Sprint to pay $18.2 million in reimbursements and to stop trying to collect another $54.7 million from California customers (some 2 million customers total) who have canceled their contracts but haven't paid the termination fee. Now of course, the ETF's are big money for carriers, and they will no doubt fight this one tooth and nail, but it's definitely one big step in no longer having to worry about early termination fees. We've reported that AT&T began prorating their early termination fees, and then how T-Mobile also got on board prorating their ETF's, which were the first signs that customers will no longer put up with paying hundreds of dollars simply because they want to end their service. Now this is 1 ruling in 1 state, but now that the news has been spread, this could cause a major movement to get similar rulings in all states and on all carriers. It's been speculated that the new era coming in may be one where cell phones themselves are higher priced, but are unlocked and customers will be free to use the service they choose with it. Most of us have been in this position, locked into a company with horrible service, but hopefully this one ruling will start something that will benefit customers nationwide, and take a little unnecessary power away from phone carriers.

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