Verizon Wireless (NYSE:VZ) will have to pay a $21 million settlement to some of its customers over its early termination fee policies following a ruling by an appeals court in California that upheld the class-action settlement.
"Yesterday's ruling by the Court of Appeal confirms that this is a terrific settlement for Verizon Wireless customers, and now more than 175,000 of those customers will get a substantial refund," said Scott Bursor, the lead attorney for the plaintiffs in the case.
A Verizon spokesman told Dow Jones Newswires that the settlement ended all litigation surrounding its ETF policies, but is not related to its current policies. The issue became a major flashpoint between the FCC and wireless carriers earlier this year, and the back-and-forth between the commission an the operators was sparked in part by a decision Verizon made regarding its ETF policies late last year.
In November, Verizon decided to raise its ETF from $175 to a pro--rated $350 for "advanced devices" like smartphones and netbooks. The FCC then queried all four of the Tier 1 operators as well as Google about their ETF policies. Wireless carriers have defended ETFs as a mechanism that allows them to provide the newest handsets to customers at subsidized prices while ensuring they can recoup the expense of those subsidies if customers break their contracts early. Most carriers now pro-rate their ETFs; the Verizon case, which dates back to 1999, centered on a flat $175 ETF.
Beginning June 1, rival AT&T Mobility (NYSE:T) raised its own early termination fee for smartphones and netbooks from $175 to $325.
- see this Dow Jones Newswires article (sub. req.)
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