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Verizon Defends Doubling of Early Termination Fee 319

I Don't Believe in Imaginary Property writes "Verizon is defending its decision to double its Early Termination Fee from $175 to $350 after being called to account by the FCC. They claim it's because the higher fees allow them to offer more expensive phones with a lower up-front cost (PDF), and they also say that because they pro-rate the fee depending on how much of your contract is left, they still lose money. Apparently doing something about the Verizon customer service horror stories isn't as good a way to retain customers as telling them that they have to pay several hundred dollars to leave."
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Verizon Defends Doubling of Early Termination Fee

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  • by wizardforce ( 1005805 ) on Saturday December 19, 2009 @12:24PM (#30498926) Journal

    Verizon's guilty of a lot more than merely doubling their early termination fees. They've also tried to pin about 300$ in botgus charges to a friend of mine's account when she tried to leave them. I hope the FTC nails them to the nearest cross.

  • by base3 ( 539820 ) on Saturday December 19, 2009 @12:42PM (#30499058)
    . . . need to be regulated like the installment loan contracts they actually are, and subject to the Truth In Lending Act.
  • by Anonymous Coward on Saturday December 19, 2009 @01:09PM (#30499246)

    And how are people informed that the contract has changed?

    IS it kept in a locked cabinet in the basement of a building with no light bulb with a sign on the door that says keep out vicious dogs?
    So the possibility of you finding that is has changed before the grace period is over is about nil.

  • Re:Fairness? (Score:3, Informative)

    by tepples ( 727027 ) <{tepples} {at} {}> on Saturday December 19, 2009 @01:09PM (#30499250) Homepage Journal

    I mean, the iPod touch is $199

    With no camera and no GSM/UMTS radio.

    and you can get a cheap throw away phone for $20

    TracFone and Virgin Mobile phones are subsidized and provider-locked in the hope that you'll buy more minutes.

  • Re:Fairness? (Score:2, Informative)

    by ozmanjusri ( 601766 ) <> on Saturday December 19, 2009 @01:26PM (#30499408) Journal
    In Australia, resellers have to tell you the actual cost of the phone. If you look at the prices at Harvey Norman [] (a big electronics/furniture chain) you can see that those "subsidised" phones can end up costing a lot.

    Nokia E51 Mobile Phone - Silver, $529
    $0 Upfront on a $30 Telstra Plan *1.
    Minimum payment $720 over 24 months.

    BlackBerry® Bold 9000 Smartphone, $999
    $0 Upfront on a $100 Telstra Plan *1.
    Minimum payment $2400 over 24 months. The BlackBerry® Bold 9000 Smartphone features email compatibility, 2MP camera and video camera.

  • Re:Don't pay the fee (Score:5, Informative)

    by causality ( 777677 ) on Saturday December 19, 2009 @01:28PM (#30499412)

    My point is that a truly and totally free market is a farce. There has to be a balancing act performed to keep the market truly competitive and profitable. Unfortunately, one groups idea of fair and balanced differs from another groups idea of fair and balanced. That is why we need regulation. Maybe this particular case isn't one that requires regulation. Maybe this particular case works as it currently is implemented. Obviously not everyone believes that, especially the person who DIDN'T get a DROID and then for whatever reason had to cancel their contract two months early.

    The only way you would ever have a free market is if the average person always fully understood both the product/service that is being sold AND any contract that goes along with it. Even that wouldn't be enough. You would then need for all people, as individuals, to be willing to boycott a company (even in the absence of a competitor) and bring it to its financial knees and to be willing to do this over even minor abuses. They must do this individually and not as the result of some organization's decision, and nearly all of them must do so. Then if a corporation even remotely looks like maybe it is screwing someone over, it gets faced with its own bankruptcy and made an example of. This will put other corporations on notice, proving to them that anything resembling bad-faith or malfeasance absolutely will not be tolerated and will be punished at all costs.

    This model would not result in more bankrupt companies. It would result in companies complying with the wishes of the people in order to make a profit, just like everything they do now is for profit. The only thing that would change are the particular behaviors that lead to profitability. This would radically change the way citizens relate to corporations. It would fundamentally alter the balance of power. Right now that balance of power favors the corporations -- they are the major players in the market, and most customers cannot truly negotiate with them but must instead accept contracts of adhesion. They have the money and the lawyers and the political clout, meaning they can alter laws in their favor RIAA-style.

    Until and unless people come to see it this way, we will indeed need government regulation. Government is about the only thing big enough and powerful enough to deal with corporations that are often larger than many nations. Even then we have the problem of well-funded lobbyists that were not sent to Washington by average citizens, but by monied interests. That's why I think this is ultimately only a partial better-than-nothing solution, as it merely relocates the problem from the marketplace to the realm of public policy.

  • Re:Meh. (Score:1, Informative)

    by Anonymous Coward on Saturday December 19, 2009 @01:44PM (#30499536)

    I'm not aware of any agreement in the wireless industry that can be changed without notifying the consumer. Typically if they change your contract in their favor you can cancel and avoid paying the ETF.

    Not necessarily. For example, AT&T and others drastically raised the cost of texting a few years back, but said that since it wasn't a material change, one couldn't terminate without paying the ETF. By all accounts, it was a material change (and IAAL) but it's a bitch to fight. They're all slimeballs, and the only way they bend is when they lose public-interest based class action lawsuits.

  • by O('_')O_Bush ( 1162487 ) on Saturday December 19, 2009 @02:06PM (#30499678)
    The Anonymous posters above is correct.

    It doesn't have to do with loss of a customer, but rather the loss of a customer before they've held the contract long enough that they pay back the phone that they got at a steep discount with the contract.

    The discounts are so steep because smart phones are so expensive, that's why they require smart phone plans and other BS to increase service costs to cover those phones, and also why they have a higher cancellation fee to cover the difference that the service plan wouldn't have if the customer cancelled early.
  • by farble1670 ( 803356 ) on Saturday December 19, 2009 @02:58PM (#30499958)

    additionally, the idea that they pay $600 for a droid phone is BS. they are the single distribution channel for the droid in the US. that means that motorola is bending over to have them push their phone. they are getting droids at a massive discount over what a normal consumer would pay for the unlocked phone.

  • Re:Fairness? (Score:3, Informative)

    by PopeRatzo ( 965947 ) * on Saturday December 19, 2009 @04:12PM (#30500318) Journal

    Also, adding in the additional hardware to make an iPod touch into a phone

    You mean a fifty-cent microphone?

    It already has WiFi. The only thing keeping you from using your iPod Touch as a really useful VOIP phone is Apple's stranglehold on the software.

    It's OK. The day when somebody starts selling a $150 Touch clone that lets you run Skype isn't far off. You can already buy cheap Touch clones in any big South Asian city. Here in the city where there's WiFi everywhere, I make calls all day long from my netbook without taking my phone out of my pocket.

  • Re:Competition (Score:4, Informative)

    by tinkerghost ( 944862 ) on Saturday December 19, 2009 @04:16PM (#30500332) Homepage
    Take a look at Wallyworld now. If you check the Verizon rack on the pre-paid phones and then look at the phones for contracts, you'll see that getting a basic phone locks you into a $350 ETF for a $45 phone. And yes, you can buy the $45 phone and then put it on a monthly account without an ETF.
  • Re:Fairness? (Score:4, Informative)

    by DJRumpy ( 1345787 ) on Saturday December 19, 2009 @05:21PM (#30500586)

    I would agree with most of your points, except that I would clarify that 'free market' without regulation (i.e. Competetion) is the cause of the U.S. lackluster performance in telecommunications. Free Market does have obvious benefits, but you can't let the wolves guard the hen-house, except in our case, we have two really big wolves, and a lot of chickens.

    I really wish they would separate content from providers.

  • by demonlapin ( 527802 ) on Saturday December 19, 2009 @05:36PM (#30500660) Homepage Journal
    They can't do it in the US, either, although /. readers frequently miss that. Verizon has raised the ETF for new subsidized smartphone purchases. I got my Droid on launch day, before the hike, and if I wanted to terminate service it would be $175. My fee has not changed.
  • Re:Fairness? (Score:4, Informative)

    by rfunches ( 800928 ) <thefunch&gmail,com> on Saturday December 19, 2009 @07:16PM (#30501044) Homepage

    Why are people complaining? Take a basic individual plan and a basic (Moto W755) phone on Verizon:

    • 2-year contract
      • Monthly plan: $39.99/mo
      • Phone: $0
      • Cancel after 1 year: $654.88 ($479.88 + $175 termination)
      • 2-year cost: $959.76
    • Month-to-month contract
      • Monthly plan: $39.99/mo
      • Phone: $249.99
      • 1-year cost: $729.87
      • 2-year base cost: $1209.75

    It's still cheaper after one year to pay the full $175 ETF on-contract than go month-to-month because they inflate the "real" cost of the phone. The month-to-month plan is nothing more than a veiled warm-and-fuzzy to the people who want to "stick it to the phone company."

  • by dupeisdead ( 711704 ) <> on Saturday December 19, 2009 @11:06PM (#30501930) Homepage

    What American phones have no contracts?

    a lot, you just need to look at the OTHER phones, not the coolest shiniest toys. But if you want a highend phone for under $200, yes you need a contract. If you want a basic phone and no contract that's doable.

  • by bstender ( 1279452 ) <mail...slashdot. ...> on Sunday December 20, 2009 @02:55AM (#30502536)
    This is a lousy business model. not sure what you can sell that used phone for, but it ain't full retail. maybe this scam is worth it to some kid with no expenses, but i doubt Verizon would allow them to make a habit of it.

    Second, Verizon does not pay 600 for that phone. if they pay more than $200 per unit i'd be surprised. Verizon does not lose money on any retail transaction whatsoever. This double fee is just extortion-as-usual, they are paving the way for a new standard. expect the others to quietly double up within the next few months. People will just grumble and pay it anyway.

  • by FSWKU ( 551325 ) on Sunday December 20, 2009 @03:18AM (#30502600)
    Yes, there is a setup fee for the additional line. It's less than the primary, but it's still pretty ridiculous.

    Anyway, what you do when the wife/girlfriend decides to leave you is this:
    1. Remove them as an account manager. This will prevent them from making ANY changes to the account (including cancellation). Change the online password, as well as the one that they have you choose when calling customer service. If you never had them as an AM, you're one step ahead of the game.
    2. Call customer service. Report the phone as lost/stolen and have them do a "suspend WITH billing". What does this accomplish? Well, first of all it puts that particular phone on the negative list, meaning it cannot be used again until you (now the sole authorized person on the account if you followed step 1) allow it to be. Even if she gets her own account, that particular ESN/MEID is blacklisted and CANNOT be used. The other thing this does is keeps your contract end date the same. If she leaves you in month 23 out of 24, you can pay the $10 for the last month, then cancel with no peanalty whatsoever. Much better than paying a $120 ETF with one month to go. If she has any additonal features on the account (text/data/international calling/whatever), you can go ahead and remove those with no penalty, and only owe the prorated amount for the time used in the current month.
    3. While you're on the line with the rep, you can also choose to block her number from your phone.
    4. If the split is more amicable, you can actually split her line off to it's own account under her name, and it would become her financial responsibility. Just tell the customer service rep you would like to do an "Assumption of Liability", and they can give you all the details. This lets her take over her line, keep her number, no ETF, and no activation fee.

    The single most important thing to remember when adding a spouse/partner/whatever to your account is that if you add them as an Account Manager, this gives them FULL control over the account to do whatever they want. This includes change your plan, add lines, drop lines, renew contracts, order phones, add/change/remove features, etc. The ONLY things they can't do are add/change AM's, change the customer service password, or perform the above mentioned Assumption of Liability. Something to think about before you add him/her on as anything other than an additional line.

I go on working for the same reason a hen goes on laying eggs. -- H.L. Mencken