Termination fees illegal?

At 05 Aug 2008 17:38:24 -0400 George wrote:


> Sure, but they don't have to kick you in the face doing it. I accept
> the subsidy part but the phone companies were being awfully
> heavy handed the way they enforced the early termination fees
> and that is what rightfully got people mad. If the fee was say $175
> and you canceled the day before your contract expired they dinged
> you for the full $175. If you canceled a day later you paid nothing.
> I would love to hear an explanation how that was fair and reasonable.


Here's one... because that's what the contract stated? Why not ask for a
reasonable explanation of why a customer cancelling service on day 729 of a
730 day contract couldn't have waited one more lousy day and avoided the
fee?

When the shoe is on the other foot, consumers don't let "one day" slide-
would you let a company deny warranty service on day 364 of a one year
warranty because the product was "almost" out of warranty? Or pay for a
car repair because the odometer was at 35,999- "almost" beyond the 36,000
mile warranty?

Of course not- but when a company holds a consumer to a contract, they're
bastards, huh?

At 05 Aug 2008 11:36:06 -0400 Carl wrote:
> XS11E wrote:
> > http://tech.yahoo.com/blogs/null/99655
> >
> This is an example of cry-baby consumers shooting themselves in the foot.
> While I'm not a fan of Big Business, I understand that early termination
> fees are necessary in order to allow carriers to give away the phones at
> highly discounted prices. They intend to make the money back over the
life
> of the contract. That should seem obvious. It is, after all, the goal of
> business to make a profit.
>
> So, what will happen next? Carriers will have to find other ways to lock
> people into contracts or they'll have to charge full price for the
phones.
> How happy will those morons who participated in that self-centered class
> action suit, who probably received pennies on their dollar anyway, be
when
> that happens? I'm sure they'll find another reason to whine then. Some
> people just don't get that a deal (ie. a contract) is a 2-way street.
>
> I don't know California law (as a matter of fact, I don't know law at
all!),
> but I am personally surprised that there would be anything illegal in any
> state in these promotional contracts. The intent of the early-term fee is
> clear and is always stated clearly to the consumer.


To be fair, however, many carriers also extend contracts for non-subsidy
reasons (special "promotional" rate plans, switching plans, etc.) I'm ok
personally with subsidy-based contracts- less so with other reasons for
extensions (but again, as long as it's all spelled out clearly, all's fair
in love and commerce.)

A bigger issue for me, is the relatively recent "contractless" contract.
I'd like to see every contract on actual paper. My last three one-year
contracts with T-Mobile (for handset upgrades) were verbal agreements over
the telephone, with no paper contract to sign and return. In the "old
days" my Cingular handset upgrades required a SIGNED contract. Even an
over-the-phone order came with a multi-part carbonless contract form to
sign and a SASE to return it in. Threats of charging you the amount of the
subsidy if their copy wasn't returned in 14 days ensured compliance.

Even if companies don't want to mess with requiring signed copies to be
returned, a nice DATED "contract" of what you've verbally agreed to (and
will be bound by if you don't return the handset within x days) would be
preferable to the completely verbal mystery "contracts" I've agreed to with
T-Mobile!

On 2008-08-06, George <george@nospam.invalid> wrote:

> Not disputing honoring obligations. I am complaining about the heavy
> handed way that megacorps muscle people into forcibly agreeing to such
> unilateral terms.

Unilateral implies you didn't agree to those terms.

--
Steve Sobol / Victorville, CA, USA
It's all fun and games until someone starts a bonfire in the living room.

Richard B. Gilbert wrote:
> George wrote:
>> D wrote:
>>> On Tue, 05 Aug 2008 17:38:24 -0400, George <george@nospam.invalid>
>>> wrote:
>>>
>>>> Carl wrote:
>>>>> XS11E wrote:
>>>>>> http://tech.yahoo.com/blogs/null/99655
>>>>>>
>>>>> This is an example of cry-baby consumers shooting themselves in the
>>>>> foot. While I'm not a fan of Big Business, I understand that early
>>>>> termination fees are necessary in order to allow carriers to give
>>>>> away the phones at highly discounted prices. They intend to make
>>>>> the money back over the life of the contract. That should seem
>>>>> obvious. It is, after all, the goal of business to make a profit.
>>>> Sure, but they don't have to kick you in the face doing it. I accept
>>>> the subsidy part but the phone companies were being awfully heavy
>>>> handed the way they enforced the early termination fees and that is
>>>> what rightfully got people mad. If the fee was say $175 and you
>>>> canceled the day before your contract expired they dinged you for
>>>> the full $175. If you canceled a day later you paid nothing. I would
>>>> love to hear an explanation how that was fair and reasonable.
>>>
>>> If you had contracted to have someone build you a house, would you be
>>> upset if he got everything done "except that last window put in?"
>>> surely you would expect him to finish what he agreed to, right? so
>>> why should a cell phone company be any differantly? you agreed to
>>> keep service to a certain point, or pay the etf. why is it so
>>> "unfair" to expect you to do as you say?
>>>
>>> To answer your question with another question, how is it not fair and
>>> reasonable to expect someone to do as they agreed to? Not almost do
>>> what they agreed to, but actually stick to the agreement?
>>
>> Not disputing honoring obligations. I am complaining about the heavy
>> handed way that megacorps muscle people into forcibly agreeing to such
>> unilateral terms. That is what incensed people and caused a backlash
>> lawsuit. Be fair and reasonable with me and there is no problem.
>>
>> In the case of say a $175 ETF just making a simple calculation the
>> subsidy is retired at the rate of $0.24/day. So if you canceled on the
>> last day you only owe $0.24 but they get a $174.76 windfall.
>
> You're close to being right but there is more to the problem. They are
> not only selling you a phone, they are also contracting to provide a
> service. In order to provide that service, they must make a capital
> investment, in towers, backhaul, equipping customer service and probably
> stuff I know nothing about. They quite properly expect to earn a return
> on that capital investment.
>
>
I understand all of that. I am not anti business. From what you describe
we are to just do whatever a business tells us to do because it is good
for them no matter if it is unreasonable or unfair. Do you just accept
whatever a business proposes without question because it is really good
for them?

For example, I recently bought a car out of state. The dealer stated
that the fees would include $xxx for the paperwork and the out of state
tags at actual cost. A friend had just done the same thing so I knew
what the cost would be. They built in another $90 on the "actual cost"
tags. I called then on it and after lots of conferencing they removed
the $110. Would you have just paid the $90 because the car dealer
obviously has overhead and needs to make a profit?

At least VZW recently decided to be fair and reasonable and pro rate the
ETF.

Todd Allcock wrote:
> At 05 Aug 2008 17:38:24 -0400 George wrote:
>
>
>> Sure, but they don't have to kick you in the face doing it. I accept
>> the subsidy part but the phone companies were being awfully
>> heavy handed the way they enforced the early termination fees
>> and that is what rightfully got people mad. If the fee was say $175
>> and you canceled the day before your contract expired they dinged
>> you for the full $175. If you canceled a day later you paid nothing.
>> I would love to hear an explanation how that was fair and reasonable.
>
>
> Here's one... because that's what the contract stated? Why not ask for a
> reasonable explanation of why a customer cancelling service on day 729 of a
> 730 day contract couldn't have waited one more lousy day and avoided the
> fee?
>
> When the shoe is on the other foot, consumers don't let "one day" slide-
> would you let a company deny warranty service on day 364 of a one year
> warranty because the product was "almost" out of warranty? Or pay for a
> car repair because the odometer was at 35,999- "almost" beyond the 36,000
> mile warranty?
>
> Of course not- but when a company holds a consumer to a contract, they're
> bastards, huh?
>
>
>
Not sure why you are putting words in my mouth because I didn't write
anything like that.

Wouldn't VZW's recent decision to pro rate the ETF invalidate your point
and be an admission that they were over the top?

George wrote:
> Richard B. Gilbert wrote:
>> George wrote:
>>> D wrote:
>>>> On Tue, 05 Aug 2008 17:38:24 -0400, George <george@nospam.invalid>
>>>> wrote:
>>>>
>>>>> Carl wrote:
>>>>>> XS11E wrote:
>>>>>>> http://tech.yahoo.com/blogs/null/99655
>>>>>>>
>>>>>> This is an example of cry-baby consumers shooting themselves in
>>>>>> the foot. While I'm not a fan of Big Business, I understand that
>>>>>> early termination fees are necessary in order to allow carriers to
>>>>>> give away the phones at highly discounted prices. They intend to
>>>>>> make the money back over the life of the contract. That should
>>>>>> seem obvious. It is, after all, the goal of business to make a
>>>>>> profit.
>>>>> Sure, but they don't have to kick you in the face doing it. I
>>>>> accept the subsidy part but the phone companies were being awfully
>>>>> heavy handed the way they enforced the early termination fees and
>>>>> that is what rightfully got people mad. If the fee was say $175 and
>>>>> you canceled the day before your contract expired they dinged you
>>>>> for the full $175. If you canceled a day later you paid nothing. I
>>>>> would love to hear an explanation how that was fair and reasonable.
>>>>
>>>> If you had contracted to have someone build you a house, would you be
>>>> upset if he got everything done "except that last window put in?"
>>>> surely you would expect him to finish what he agreed to, right? so
>>>> why should a cell phone company be any differantly? you agreed to
>>>> keep service to a certain point, or pay the etf. why is it so
>>>> "unfair" to expect you to do as you say?
>>>>
>>>> To answer your question with another question, how is it not fair and
>>>> reasonable to expect someone to do as they agreed to? Not almost do
>>>> what they agreed to, but actually stick to the agreement?
>>>
>>> Not disputing honoring obligations. I am complaining about the heavy
>>> handed way that megacorps muscle people into forcibly agreeing to
>>> such unilateral terms. That is what incensed people and caused a
>>> backlash lawsuit. Be fair and reasonable with me and there is no
>>> problem.
>>>
>>> In the case of say a $175 ETF just making a simple calculation the
>>> subsidy is retired at the rate of $0.24/day. So if you canceled on
>>> the last day you only owe $0.24 but they get a $174.76 windfall.
>>
>> You're close to being right but there is more to the problem. They
>> are not only selling you a phone, they are also contracting to provide
>> a service. In order to provide that service, they must make a capital
>> investment, in towers, backhaul, equipping customer service and
>> probably stuff I know nothing about. They quite properly expect to
>> earn a return on that capital investment.
>>
>>
> I understand all of that. I am not anti business. From what you describe
> we are to just do whatever a business tells us to do because it is good
> for them no matter if it is unreasonable or unfair. Do you just accept
> whatever a business proposes without question because it is really good
> for them?
>
> For example, I recently bought a car out of state. The dealer stated
> that the fees would include $xxx for the paperwork and the out of state
> tags at actual cost. A friend had just done the same thing so I knew
> what the cost would be. They built in another $90 on the "actual cost"
> tags. I called then on it and after lots of conferencing they removed
> the $110. Would you have just paid the $90 because the car dealer
> obviously has overhead and needs to make a profit?
>
> At least VZW recently decided to be fair and reasonable and pro rate the
> ETF.

Well, the world managed to exist without Cell Phones for many thousands
of years! Why can't you?

You want the convenience? Pay the bill!

George <george@nospam.invalid> wrote:

> Wouldn't VZW's recent decision to pro rate the ETF invalidate your
> point and be an admission that they were over the top?

No, it wasn't Verizon's decision, it was a reaction to lawsuits filed
in various states, particularly California.



--
XS11E, Killing all posts from Google Groups
The Usenet Improvement Project:
http://improve-usenet.org

George wrote on [Wed, 06 Aug 2008 11:55:58 -0400]:
> Todd Allcock wrote:
>> At 05 Aug 2008 17:38:24 -0400 George wrote:
>>
>>
>>> Sure, but they don't have to kick you in the face doing it. I accept
>>> the subsidy part but the phone companies were being awfully
>>> heavy handed the way they enforced the early termination fees
>>> and that is what rightfully got people mad. If the fee was say $175
>>> and you canceled the day before your contract expired they dinged
>>> you for the full $175. If you canceled a day later you paid nothing.
>>> I would love to hear an explanation how that was fair and reasonable.
>>
>>
>> Here's one... because that's what the contract stated? Why not ask for a
>> reasonable explanation of why a customer cancelling service on day 729 of a
>> 730 day contract couldn't have waited one more lousy day and avoided the
>> fee?
>>
>> When the shoe is on the other foot, consumers don't let "one day" slide-
>> would you let a company deny warranty service on day 364 of a one year
>> warranty because the product was "almost" out of warranty? Or pay for a
>> car repair because the odometer was at 35,999- "almost" beyond the 36,000
>> mile warranty?
>>
>> Of course not- but when a company holds a consumer to a contract, they're
>> bastards, huh?
>>
>>
>>
> Not sure why you are putting words in my mouth because I didn't write
> anything like that.
>
> Wouldn't VZW's recent decision to pro rate the ETF invalidate your point
> and be an admission that they were over the top?

In fact, no, it doesn't.

At 06 Aug 2008 11:55:58 -0400 George wrote:

> >> Sure, but they don't have to kick you in the face doing it. I accept
> >> the subsidy part but the phone companies were being awfully
> >> heavy handed the way they enforced the early termination fees
> >> and that is what rightfully got people mad. If the fee was say $175
> >> and you canceled the day before your contract expired they dinged
> >> you for the full $175. If you canceled a day later you paid nothing.
> >> I would love to hear an explanation how that was fair and reasonable.
> >
> >
> > Here's one... because that's what the contract stated? Why not ask for
a
> > reasonable explanation of why a customer cancelling service on day 729
of a
> > 730 day contract couldn't have waited one more lousy day and avoided the
> > fee?
> >
> > When the shoe is on the other foot, consumers don't let "one day" slide-
> > would you let a company deny warranty service on day 364 of a one year
> > warranty because the product was "almost" out of warranty? Or pay for a
> > car repair because the odometer was at 35,999- "almost" beyond the
36,000
> > mile warranty?
> >
> > Of course not- but when a company holds a consumer to a contract,
they're
> > bastards, huh?
> >
> >
> >
> Not sure why you are putting words in my mouth because I didn't write
anything like that.


You implied enforcing the contract terms to the letter was neither "fair"
nor "reasonable." I'm only suggesting that "fair and reasonable" depends
on which side of the contract you're on...

> Wouldn't VZW's recent decision to pro rate the ETF invalidate your
> point and be an admission that they were over the top?

Not really- they caved to the court of public opinion, which is presuring
Congress and/or the FCC to protect consumer stupidity. (Much like the home
lending "crisis" bailout. Sorry, but I have little sympathy for idiots who
buy more house than they can afford by using short-term, interest-only
loans with giant balloons and are unable to make the payments.)

Think of it like the MPAA ratings system for movies- the ratings system was
a self-policing move designed to stave off government
interference/censorship. Verizon's pro-rating was a similar move- it
basically says "we don't need burdensome knee-jerk consumer protection laws-
we'll 'protect' our customers voluntarily."

Verizon was brilliant- by being first to pro-rate, they forced other
carriers to match them, but since they have the lowest churn rate in the
industry, they have the least to lose by pro-rating.

Secondly, it's not really a true "pro-rate"- pro-rating implies an equal
deduction over time- i.e. 1/24th of the original fee each month.

IIRC, the actual deduction is $5/month, so the $175 is down to about $50 at
month 24, rather than the $7 or so a true pro-rata formula would leave.
(At least that's how I remembered it from the initial press releases- I
certainly could be wrong, or the policy refined since then.)

At 06 Aug 2008 11:54:23 -0400 George wrote:

> I understand all of that. I am not anti business. From what you
> describe we are to just do whatever a business tells us to do
> because it is good for them no matter if it is unreasonable or unfair.

No, you do business with companies that you feel are "fair."

> Do you just accept whatever a business proposes without question
> because it is really good for them?


No- if you don't like the terms, don't do the deal. Most cellular
companies offer alternatives to contracts- and not just prepaid, AT&T and T-
Mobile offer their monthly plans without contract (you pay full price for
phones, or supply your own.) Sprint offers (or offered) no contract plans
for a $5/monthly surcharge.


> For example, I recently bought a car out of state. The dealer stated
> that the fees would include $xxx for the paperwork and the out of
> state tags at actual cost. A friend had just done the same thing so
> I knew what the cost would be. They built in another $90 on the
> "actual cost" tags. I called then on it and after lots of conferencing
> they removed the $110. Would you have just paid the $90 because
> the car dealer obviously has overhead and needs to make a profit?


No, I negotiate the fees off the table at the start. In reality it makes
no difference- they need to make "x" dollars, so the $300 in "fees" I
refuse to pay end up in the price of the car somewhere.

> At least VZW recently decided to be fair and reasonable and pro rate the
ETF.

And, like in the car example, that additional cost to them comes out
somewhere!