Verizon agrees to pay $21 million to settle cell phone termination fee suit

Posted Jul 10th 2008 2:14PM by Joseph Lazzaro
Filed under: Consumer Experience, Verizon Communications (VZ)

Verizon Wirless Thursday agreed to pay $21 million to settle a lawsuit filed by California customers upset with the company's early termination fees, the Associated Press reported.

Details are still pending, but Alan Plutzik, Alameda County (California) Superior Court judge said "we are recovering cash" that would "be available" to Verizon mobile phone subscribers who paid fees to end their contracts early, AP reported.

Shares of Verizon Wireless' parent Verizon (NYSE: VZ) were virtually unchanged on the news, dipping just 8 cents $34.58 in mid-day Thursday trading.

Warranted reimbursement or California dreamin'?

Stock analyst C. Leonard Bauer told BloggingStocks Thursday that, while he abhors cell phone / PDA termination fees as many others do, thinking that mobile phone / phone service providers can eliminate the $100-$250 fee without increasing charges elsewhere does not represent clear thinking.

"Mobile service providers can not do away with termination fees without increasing the price of phones or other mobile service prices. There is the matter of hardware, which is a sizable expense for the providers," Bauer said. "What mobile service companies will do is seek to recover the fee in other ways, including monthly charges for peak minutes."

Alternatively, Bauer said some mobile service providers may seek to pro-rate fees in exchange for a larger sign up / activation fee. Bauer added that he does not have a rating on nor own shares in Verizon.

Sprint Nextel Corp. (NYSE: S) was the first company to face trial in Alameda County Superior Court last month, The AP reported Thursday. Judge Bonnie Sabraw has not yet issued her decision in that case on the legality of the fees in California.

Tags: cell phones, inthenews, mobile phones, PDAs, S, Sprint Nextel, termination fee, Verizon, VZ

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Reader Comments (Page 1 of 1)

7-10-2008 @ 3:40PM

Merrie said...

any chance of having the same suit filed against DIRECT TV?

7-14-2008 @ 10:47AM

Odile said...

It seems reasonable to charge a termination fee to cover the cost of the cell phone. But what is NOT REASONABLE is to renew the termination fee period when a contract is renewed or changed by so small a thing as changing the number of prepaid text messages! I had my phone for over three years. When I found out I was going to be sent to serve overseas, I didn't get a new phone (although the one I had didn't work very well) to make sure I wouldn't have to pay termination fees. Well, I got charged anyway, because of a small change in the contract. THAT should be illegal.

7-20-2008 @ 12:51AM

silky said...

Odile, it's not illegal in a criminal sense, but you can easily sue and win for that. If they made a non-substantial change to your contract, you wouldn't be bound by it.

8-03-2008 @ 6:38PM

Dude said...

I my self cannot see why if I already own the Cell phone outright , Why I should pay an early termination fee there is no equipment expense to them and the cost of the Sim Card cannot be that great , Boost Mobile has a plan where buy the phone I think for $120.00 about and pay $45.00 amonth for unlimited minutes anytime and texting as long as you want to use it , if you want to cancel just cancel no early termination fee