lawsuits over broadband early termination fees could loom, lawyers and
consumer groups said in comments on a recent suit against Qwest fees
for DSL service. ETFs, common in the wireless sector, only recently
have begun to see use in broadband services, with carriers using them
retain existing customers, Consumer Union said. Qwest was named in a
multi-state class action lawsuit last week in Washington. Qwest doesn’t
comment on pending lawsuits, a spokesman said.
top U.S. broadband providers now have ETFs in their contracts, with
penalties of $200 or more, Hearusnow.org said. ETFs are a problem for
consumers, and the FCC or Congress should consider reform, said Chris
Murray, senior counsel with Consumers Union. Sens. Jay Rockefeller, D-
W.Va., and Amy Klobuchar, D-Minn., have introduced bills to require
clear disclosure of company billing practices, prorating of early
termination fees and maps of service areas.
fees are "out of line" with what it costs a company to lose a customer,
complaints about them could be legitimate, said attorney Jim Baller,
who represents municipalities and follows broadband issues. If, in
light of court decisions, a company’s ETF terms seem unreasonable, that
company needs a new ETF policy, he said. The key is balance, he said.
The pattern seen in suits filed so far suggests some providers have
gone too far with the fees, Baller said. Mark Reback
of ConsumerWatchdog.org agreed, calling the Qwest case no surprise.
Carriers have been "waging an abusive war" on people by overcharging,
he said, and suits are a weapon consumers can wield to protect their
Qwest said its early-termination charge
isn’t a penalty, but "an offset or recovery" of costs to manage
accounts and make up for discounts given long-term customers. A
spokesman for Verizon, which also charges ETFs for broadband, said the
fee is levied to regain what it has been giving the customer at a
reduced rate. The company charges $79 when a customer on a one-year
contract cancels service before the deadline. Customers who contract
for broadband often get free equipment and installation, depending on
the service ordered, also saving $8 to $10 on their monthly rate, he
said. Annual plan customers often get significant discounts, he said,
saying customers have the option of selecting month-to-month plans that
have no ETF.
The Qwest case was brought pursuant to
the Washington Consumer Protection Act and other state laws designed to
protect consumers against unfair or deceptive business practices, court
filings said. Plaintiffs call Qwest’s $200 ETF unenforceable because
the company has not estimated its actual losses when a contract is
terminated early, said Dan Bryden, an attorney for them. Two former DSL
customers of Qwest sued the operator in the U.S. District Court for the
Western District of Washington. The class, if approved, would cover
Qwest customers in Arizona, Colorado, Idaho, Iowa, Minnesota, Montana,
Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah,
Washington and Wyoming, court filings said. The plaintiffs asked for
return or refund of all amounts they had paid Qwest for ETF charges, as
well as interest, attorneys’ fees and costs, court filings said.
carriers have adopted consumer-friendly contract termination policies
without being forced to do so by government, CTIA has told the FCC. In
a letter to the agency, the trade group cited such efforts by AT&T,
Verizon Wireless, Sprint Nextel, T-Mobile and Alltel.