Sprint Nextel has agreed to pay $17.5 million to settle a federal class-action lawsuit over early termination fees (ETFs) that originally claimed Sprint had charged $1.2 billion in illegal ETFs since 1999. The lawsuit was filed in November in the U.S. District Court for the District of New Jersey, days after Sprint said it would institute a new set of rules to pro-rate ETFs.
As part of the settlement, the carrier will put $14 million in a common fund to be distributed among members of the class action. Sprint also will pay $3.5 million in non-cash benefits. The carrier denied the allegations in the lawsuit. Customers are eligible to take part in the class-action lawsuit if they were Sprint CDMA customer, a Nextel iDEN customer, or both, and entered into a wireless contract with the carrier between July 1, 1999, and Dec. 31, 2008, and if their claim relates to ETFs.
In December, Sprint received preliminary court approval to settle the case. The final hearing for the case is set for Oct. 21.
The FCC began looking into the early termination fee model last year, sparking a range of responses from the industry's wireless carriers. Verizon Wireless was the first carrier to pro-rate ETFs, back in November 2006. AT&T Mobility followed suit in October 2007, and T-Mobile USA jumped on the bandwagon in November 2007.
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