Understanding ISP Early Termination Fees

If you are trying to cancel, downgrade, or switch cable and internet service providers, you might see something called an early termination fee on your final bill. But what is it and is it even legal? We explain.

Why do cable and internet companies charge early termination fees?

Cable and internet service early termination fees are a set of fees that telecommunications providers can charge you if you choose to cancel your contract prematurely. The fees are designed to help the companies compensate for the loss of you as a customer but sometimes they get a little excessive.

Unfortunately, most adults don’t really understand what they are. According to an FCC survey, 64% of consumers with cable and Internet packages didn’t know what an early termination fee was. Only 20% of cable and internet users know for a fact that their contract includes an early termination fee.

43% of respondents said that they would remain with their current service provider and would avoid switching for a better service or a new service based entirely on the deterrence of the early termination fee.

These fees are not officially supposed to serve as a deterrent. Companies will say they aren’t meant to be a punishment for customers or a way to coerce customers into staying.

And early termination fees are perfectly legal so long as they are included in the contract. The thing is, not many sales staff will point out that they are part of your contract, and they don’t have to. Reading the fine print in the terms and conditions is supposed to be up to each customer

Are cable and internet service early termination fees legal?

Yes. These fees are perfectly legal in accordance with the FCC. The idea behind these fees is that they should amount to a reasonable amount of money designed to compensate the company for any losses associated with getting the new customer, providing any promotional equipment, and so forth. Theoretically this prevents people from taking advantage of cable and internet service providers by signing up when a 30-day deal is offered and then canceling service right before that offer ends, repeating the same process with one provider and then another.

Early termination fees can be so aggressively imposed that in 2016, New York state passed a law banning early termination fees for people who were deceased, following reports about practices by DISH Network.

How can I avoid early termination fees?

The FCC provides simple guidelines for avoiding excessive fees.

1. Firstly, you have to be aware that these fees can exist no matter what the contract type and you have to ask about them. The sales rep with whom you were may go on and on about what a great promotional deal you are getting but failed to mention the early termination fees.
2. Secondly, for fees relating to equipment you can ask your cable and internet service provider if you are able to purchase the equipment at full price in order to avoid this fee. Companies like Google Fiber give you the option of purchasing their internet equipment at full price when you first sign up for the service, something you can use when negotiating against early termination fees.
3. Thirdly, ask them if any corresponding trials or promotional deals you are considering have the option of canceling your service without these fees. Promotional deals that last between 14 and 30 days are typically considered trials in which case you are allowed to cancel your service without the early termination fee.

Can I negotiate over an early termination fee?

You can absolutely negotiate over an early termination fee. In order to do so, it is best for you to make sure you have all of the details pertaining to your account, your contract, and your bills. Some companies list the early termination fee very clearly on the regular monthly bills they send While others don’t include it at all, which is partly why many people don’t even know they have an early termination fee on their account.

You can speak calmly to a customer service representative and explain why you were unaware there was even a fee associated with your account, using something like a bill that has no mention of it as your evidence. 

Some companies offer a prorated early termination fee which means they charge you a certain monthly amount based on how many months are left on your contract. This is usually your best means of negotiation with a company. Even companies that don’t offer a prorated amount might be flexible if you bring to their attention that a sales representative misled you when you signed up for your service, or the terms and conditions didn’t clearly state something to do with an early termination fee, or it’s not designated anywhere on your monthly bill.

I’m being charged an early termination fee but I shouldn’t be, what can I do?

While you are able to try your best at negotiating an early termination fee, it doesn’t always work. You might get someone who’s not very helpful or refuses to even listen. At FairShake, we can help. 

Learn how our process works in your favor, how we can act as your guide, and how we can get you the refund you deserve. Or start a claim now…