Verizon jacks up early-termination fee for smart phone contracts
Verizon Wireless is one of the biggest mobile phone carriers in the U.S. Like most carriers, the company enforces the early-termination policy in order to lock customers into two year contracts. The company has recently announced that starting this month the termination fee will nearly double in cost.
Early-termination fee (EFT) is a policy many carriers in the U.S. practice. Most mobile carriers sell phones at a lower cost in hopes of subsidizing it over time with the plans. However, when a customer cancels their contract before it’s up, mobile carriers are at risk of never recouping the original cost of the phone.
Verizon Wireless’s EFT policy has been a subject of much controversy in the past. The company was sued last year and ended up agreeing to pay $21 million to settle a class-action suit. Despite the fact the company ended up settling with the consumers of California over this suit, Verizon Wireless clearly defended its EFT policy.
The standard EFT is $175 for those that cancel their contract with Verizon Wireless. However, the company will be doubling the EFT to $350 for smart phones effective Nov. 15. According to CNET, the reason why Verizon Wireless is jacking up the EFT for smart phones is due to the higher than normal up front cost.
The new EFT plan will decrease by $10 every month under the new policy. Interestingly, by the 23rd month of the contract, consumers will still have to shell out $110 if they decide to cancel the plan. Consumer Union policy analyst, Joel Kelsey indicated that this move further restricts consumer options and makes the marketplace less competitive. Many are questioning Verizon Wireless of this move as it will mean that the consumers will be further penalized for leaving for a better plan.
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November 8th, 2009
Well…
EFT = Electronic Funds Transfer
ETF = Early Termination Fee
as for the new ETF? Whaaaa. Buy the smartphone for what its worth, OR stick with the contract you signed to get the discounted phone. You need not sign a 2 year commitment, sign only a 1 year or none! With highly desirable devices like Storm2 and DROID and all the scammers buying phones for the discount then dropping contract and flipping phones in ebay, they have to take some action to protect the value of the discounted pricing.
Go ahead, pay the $539 or whatever for the phone and shut up with the whining.
November 9th, 2009
Looks like many people will be needing services like Cellswapper.com
November 9th, 2009
I used Cellswapper and after the twitter coupon it only costed me $8.95 to get out of contract.
November 11th, 2009
Looks like many people will be needing services like Cellswapper.com
November 12th, 2009
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