Cell phone carriers sued over contracts
June 12th, 2006 | by amarfresh |Consumers looking to weasel out of their cell phone contracts may have something to cheer about. In Alameda, CA, a class-action lawsuit against Sprint and Verizon was certified.
The plaintiffs’ attorneys have argued that while the contracts are legal, the fees are unlawfully high and are designed to go after customers’ assets above and beyond what is necessary to compensate the carriers for their investment in the lost customer.
It will be interesting to see how this flies. Once the court system understands the economics of getting a “free cellphone with a new contract,” I have a feeling that the class action may lose some wind. Not to mention the deep pockets these cellcos have.
12 Responses to “Cell phone carriers sued over contracts”
By RingtoneWarrior on Jun 12, 2006 | Reply
I believe that the carriers should fight hard for this win in court , as I feel consumers should hold up there end of the contract and if they want an early release from any contractual agreement with a service provider or carrier they need to except and except a stiff financial penilty for any breach or early release.
I mean really a business has a right to sue for breach and should.
Far to many people these days try to weasel out of all kinds of responsabilities and a carrier should’nt be any different than a home mortgage or a school loan.
Consumers just pay your bills or expect to be sued….. If your gonna be big and skip out don’t cry when you loose..Just be big about it..!
Think About It!
Visit me at http://groups.google.com/group/Ringtone-Offers
By Susan on Jun 21, 2006 | Reply
RingtoneWarrior is an idiot.
I paid for a Sprint cell phone, Sprint set-up fee and a Sprint two-year required contract. A month later I moved three miles down the road and have had NO service there since moving. Because it was past the 15-day warrantee period, I will suck up over $450 — which includes a $150 cancellation fee. I did cancel because I DON’T GET SERVICE. $450 is EXPENSIVE for one month of cell phone service. The Sprint rep suggested that I try to sell the service contract and phone to someone else. Unbelievable! Sprint sucks, and any company with similar tactics sucks also.
By Bigdaddy on Jun 21, 2006 | Reply
Hi all,
Im very sad to hear of your delemma Susan, Im sure the Warrior was not reffering to situations such as your’s ..It is not fair that you should have to endure a financial cost for Sprints technical issues….
Im really roasted when people just simply change thair minds and than try to get out of contracts, A business has the right to defend itself for those types of consumers…
Well i wish you well with this situation Sue, and cheer up!
As Vince Mc Mann say’s
Life Sucks And Than You Die!
Think About It!
By kcgunesq on Jun 21, 2006 | Reply
Generally speaking, the law in most states does not allow for contracts to impose “penalties” for breaking the contract. In this sense, there is a specific legal meaning to the word “penalty”, so don’t confuse it with an everyday use. What the law usually allows is that each party hold up their end of the bargain.
If AmerCelluCo gives me a “free” phone on the condition that I sign a 2yr contract, they have a right to expect 2 years of service at some minimum level (say, $50 per month). If I quit the service after 23 months, asking me to pay $200 is a penalty that isn’t related to them getting their end of the bargain. Its not like they somehow make $200 in the last month on a $50 payment.
The normal rule for calculating contract damages is to take expected profits and subtract received profits plus costs avoided. With cell phones an easy shortcut might be to take the termination fee and divide by the contract period multiplying that number by the remaining period (e.g., ($200/24) * remaining months. Contracts are free to state a particular amount of damages (known as liquidated damages), but it must bear some resemblance to actual damages, especially when both sides don’t have an equal ability to neogtiate the contract. Just try getting the clerk to make even a minor change. It won’t happen.
My hunch is that this suit has a pretty decent chance of dinging the carriers, esepcially given that the plainitiffs likely filed it in a jurisdiction sympathetic to such claims.
THE ABOVE IS NOT LEGAL ADVICE AND I AM NOT YOUR ATTORNEY.
-kcgunesq
By Mateosgirl on Aug 21, 2006 | Reply
Just for information purposes. Our company is relocating to Missoula Montana this year. After seven years with Nextel now Sprint we have been informed our cell phones do NOT work in the greater Missoula area, an area growing and very large. Sprint had informed me I will pay a disconnect/early termination fee on EVERY phone, even when they cannot provide service to our company in this largely growing area.!!!! SPRINT and their contract in this situation are UNLAWFUL!!!!!!! BEWARE any one who reads this!!!!!They want us to fullfill our contract, but isn’t their end of the deal to provide service??????????
CONFUSED IN MONTANA
By blckbrnnc on Dec 4, 2006 | Reply
I am all for contracts being honored. However, there are times when one gets into contracts and for reasons beyond their control can not fulfill them for instance change in income ect…. I feel these early termination fees are outrageous and penalize a lot of people in trouble already…. Just remember one day you may have the means and the next you don’t. I feel that these contracts are traps!
By Shawn Humiston on Dec 15, 2006 | Reply
If I am not mistaken, contracts work two ways. While I am expected to uphold the terms of my end of the contract so is the cell phone company. When I sign up and am locked into a 2 year contract and then suddenly due to network aquisitions, mergers etc, I am suddenly unable to get service anywyhere, do not recieve my messages, text messages don’t show up sometimes for days, am constantly ignored or pushed off by the customer service and tech support crew, and despite all the “help” nothing is ever fixed or resolved, then it is fair to say that my cell provider is not meeting their end of the contract, or the terms under which I agreed to.
I agreed to a contract which provides me with cell usage and coverage, not with a phone that does not recieve calls, cannot make calls, drops calls, messages and texts arrive days later, etc. Given that I as the customer have done all that is within my power to remedy this issue and have had no resolution, it is my right to terminate the contract due to breach in the agreed upon terms. I met my terms( I paid my bill for a year despite the poor service,I contacted customer service countless times before finally cancelling), they did not!
What choice do we as consumers have when left with no remedy, but to cancel our service and face the wrath of cell providers or early termination fees? How is it ok that the cell provider can negatively affect your credit report, despite the fact that it is they who have broken the terms of the contract.
Cingular among other cell providers are currently being sued by numerous consumers via class action and small claims suits. Based on the sheer amount of consumers with the same complaints it is obvious that they are taking advantage of consumers as well as not meeting the terms of the contract that we are expected to abide by.
The point is simple, if I pay a company x amount of dollars per month to provide a service, then they MUST provide me with that service, otherwise, it is they who are in fact breaching the terms of the contract and should be held accountable, rather than the one sided way in which the consumer once again must suffer and gets the shaft!
By Ken Miller on Jan 25, 2007 | Reply
I am about to move to the Misoula (no fault of my own) area from eastern Washington and have the misfortune of contracting with Nextel/Sprint. They have never provided cell service in the town in which all government services are provided in my county. I did not know this when I contracted with them (there service area map includes this area). I loose service 50% of the time. They just opened a new store in thier dead zone (go figure).
I find there business practices disgusting and forever will be as much of a marketing nightmare to them as I can be.
By dianne donenfeld on Feb 14, 2007 | Reply
I would like to know if anyone knows of any class action suits against the cell phone companies for breaking contracts. They change my contract every time one of the phones are upgraded and then charge me for the service I had for free. Now my cell phone bill that started out at $100 in 2003 is now $200 and I still have the same services. To me that is a breach of contract.
By Jonathan on Feb 21, 2007 | Reply
The law may be on both sides of the issue depending upon the extent of the liquidated damages clause and the amount being lost by either party compared to the cost to the consumer for the breach. The law favors what is called an efficient breach where the parties’ resources are better spent elsewhere.
By Gerry on Sep 2, 2007 | Reply
Whatever law that allows for a penalty payment against the customer in favor of the provider has no justice in it. In mainland Europe it is against the law to prevent people from leaving a contract by charging a penalty. It violates every right the consumer has. If the provider wishes to hand out free phones in order to lure people in, that is his choice. No one put a gun to his head making him provide free phones. Personally I have a family plan with 2 blackberrys and 1 Razor. I paid top dollar for every phone from an outside vendor. I have 6 more months to go on a 2 yr contract and AT&T is charging me $175.00 per phone. That there are no laws in this country protecting the consumer against these practices is shameful. Once again, it is Corporate America abusing the consumer.
By Shireen on Sep 11, 2007 | Reply
Sprint will never get my business again. After over a decade of Nextel service, I am also being hit with the $200 penalty - their short-term gain and long-term loss. Better sell your stock now…customers are fed up.