Understanding Wireless Early Termination Fees

If you don’t really understand your phone service early termination fees, you are certainly not the only one. There are plenty of people today who don’t know whether their phone service comes with an early termination fee, and even more who don’t know how much that fee is.

What are early termination fees?

If you are confused about early termination fees, what they are, and whether they are legal, you are in good company. The FCC conducted a large survey and found that out of the 3,000 people interviewed, most individuals had a lot of questions when it came to early termination fees.

• 54% of respondents said they knew that was an early termination fee associated with our contract but 18 per cent had no idea whether or not they would have to pay.
• Of the 54% who knew, almost half noted that their early termination fee was over $150. 

So why is there so much confusion? It comes down to phone service billing practices. 36% of customers said that clear information about early termination fees are included on their bill. But this means that 64% of people don’t get good communication from their communications provider about what early termination fees are, if they apply, and if so, how much they are.

Early termination fees can add up very quickly especially if you have a very expensive phone or you have multiple lines under the same contract; lots of major telecommunications companies will charge you an early termination fee for every single line you have.

Are phone service early termination fees legal?

Theoretically yes. The purpose behind her phone service early termination fees is to recuperate losses on behalf of the company when customers take advantage of promotions or deals, or offers that give customers very low rates for one or two months or maybe the first year of a 2-year contract. Some customers will sign up with a phone service when these deals take place, and then cancel their contract as soon as the deal is over. Early termination fees are meant to compensate the company when this happens.

The FCC allows reasonable early termination fees. However, they do advise that you ask about any corresponding fees before you sign up for a contract, and that you ask whether these fees are prorated.

For example:  If you have a 2 year contract with Cox, they might charge you an early termination fee of $240 which decreases by $10 per month over the course of that two-year contract. In this case, each month you stay within your 2 year contract lowers your early termination fee.

However, not all companies are like this. Some companies will charge a very high termination fee and then drop it by just $5 per month, only for the last 4 months of a contract. This, again, is meant to recuperate losses on behalf of the company. 

However, it becomes an issue that you can fight if the charges are excessive and if they are designed by your provider to coerce you into staying with them for fear of the prohibitively high cost.

What if the early termination fees are excessive?

The FCC says it is studying early termination fees for wireless carriers and corresponding with them in situations where the fees start to get excessive. They do ask that customers who have faced issues with early termination fees report them. Only by sharing your story can you help the FCC regulate big companies that are trying to take advantage of customers.

In situations where customer data proves that the fees are excessive, the FCC has taken legal action against different carriers including Sprint and Verizon Wireless. 

How do I know if my contract with my company has an early termination fee?

Review all of the terms and conditions for the services they offer you to check including early termination fees. This might be in your contract, user agreement, consumer agreement, or under a similar name but it always applies to the terms and conditions to which you agree when you use their services. 

Can I negotiate my early termination fee?

You can certainly try to negotiate. This can happen before you sign up for your service, or after. If you are savvy enough to look over the terms and conditions before you sign up with a new phone service, you could try and negotiate a lower early termination fee, but get it in writing. If you are trying to change your phone service and work through the early termination fees already against you, you might be able to negotiate for a prorated service fee, where you get credit for every month you have fulfilled your contract. 

What if companies charge an early termination when I shouldn’t owe it?

In most cases where companies charge an early termination fee that you shouldn’t, it may be because you were misled or some part of your contract wasn’t made clear to you.

This can happen from time to time. There are some companies or sales reps that might highlight the fact that they don’t have an early termination fee when in reality the fine print says that the lack of early termination fee is only in some cases, like for prepaid services. So, if you sign up for a contract-based monthly plan, you might be surprised to find that when you cancel, there is a fee levied against your account. 

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

At FairShake, we can help. We work with customers just like you who are charged early termination fees, but shouldn’t have been. Learn how our process works in your favor. Or start a claim today…