More ETF Lawsuits to Follow Qwest Case, Consumer Advocates Say
More lawsuits over broadband early termination fees could loom, lawyers and consumer groups said in comments on a recent suit against Qwest fees for DSL service. ETFs, common in the wireless sector, only recently have begun to see use in broadband services, with carriers using them retain existing customers, Consumer Union said. Qwest was named in a multi-state class action lawsuit last week in Washington. Qwest doesn’t comment on pending lawsuits, a spokesman said.
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Many top U.S. broadband providers now have ETFs in their contracts, with penalties of $200 or more, Hearusnow.org said. ETFs are a problem for consumers, and the FCC or Congress should consider reform, said Chris Murray, senior counsel with Consumers Union. Sens. Jay Rockefeller, D- W.Va., and Amy Klobuchar, D-Minn., have introduced bills to require clear disclosure of company billing practices, prorating of early termination fees and maps of service areas.
When fees are “out of line” with what it costs a company to lose a customer, complaints about them could be legitimate, said attorney Jim Baller, who represents municipalities and follows broadband issues. If, in light of court decisions, a company’s ETF terms seem unreasonable, that company needs a new ETF policy, he said. The key is balance, he said. The pattern seen in suits filed so far suggests some providers have gone too far with the fees, Baller said. Mark Reback of ConsumerWatchdog.org agreed, calling the Qwest case no surprise. Carriers have been “waging an abusive war” on people by overcharging, he said, and suits are a weapon consumers can wield to protect their rights.
Qwest said its early-termination charge isn’t a penalty, but “an offset or recovery” of costs to manage accounts and make up for discounts given long-term customers. A spokesman for Verizon, which also charges ETFs for broadband, said the fee is levied to regain what it has been giving the customer at a reduced rate. The company charges $79 when a customer on a one-year contract cancels service before the deadline. Customers who contract for broadband often get free equipment and installation, depending on the service ordered, also saving $8 to $10 on their monthly rate, he said. Annual plan customers often get significant discounts, he said, saying customers have the option of selecting month-to-month plans that have no ETF.
The Qwest case was brought pursuant to the Washington Consumer Protection Act and other state laws designed to protect consumers against unfair or deceptive business practices, court filings said. Plaintiffs call Qwest’s $200 ETF unenforceable because the company has not estimated its actual losses when a contract is terminated early, said Dan Bryden, an attorney for them. Two former DSL customers of Qwest sued the operator in the U.S. District Court for the Western District of Washington. The class, if approved, would cover Qwest customers in Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming, court filings said. The plaintiffs asked for return or refund of all amounts they had paid Qwest for ETF charges, as well as interest, attorneys’ fees and costs, court filings said.
Wireless carriers have adopted consumer-friendly contract termination policies without being forced to do so by government, CTIA has told the FCC. In a letter to the agency, the trade group cited such efforts by AT&T, Verizon Wireless, Sprint Nextel, T-Mobile and Alltel.