Verizon Wireless doubles ETFs for smartphones, other high-end devices

Despite multiple class action lawsuits over early termination fees and the Federal Communications Commission's notice of cancellation fees, Verizon Wireless plans to double its early termination fees (ETF) to $350 for subsidized smartphones, netbooks and other high-end devices that are purchased after Nov. 15.

The operator said the higher ETF "fairly reflects the higher costs associated with offering advanced devices to consumers at attractive prices and investing in our network to support these devices," according to an article in InformationWeek. To avoid the ETF, Verizon says customers have the option to purchase smartphones outright. Devices like the Motorola Droid are priced in the $500 range, but Verizon is selling it for $200 tied with a two-year contract.

Verizon previously stipulated a prorated $175 ETF that was incurred when a customer canceled service before the end of a contract. The new ETF will decrease by $10 per month for the life of the contract.

The company also said new customers can still cancel service within the first 30 days without having to pay an ETF as long as they return any subsidized equipment.

ETFs continue to be a thorny issue for consumer advocacy groups and lawmakers that claim they hinder consumer choice, and several class-action lawsuits have been filed over ETFs.

Sen. Amy Klobuchar (D-Minn.) said she will likely introduce legislation to prohibit wireless companies from unfairly raising early termination fees (ETFs). That decision was coupled with a letter Klobuchar sent to Verizon Wireless CEO Lowell McAdam expressing her disapproval of Verizon's decision to double its early termination fee to $350 starting Nov. 15 for consumers who purchase so-called "advanced devices." 

"I remain concerned that ETFs--especially at these high prices--unfairly penalize consumers, bear little to no relationship to the cost of the handset device, and are anti-consumer and anti-competitive," she wrote in the letter. Verizon will pro-rate the new ETF at $10 per month. 

For more:
- see this InformationWeek article
- look at this FierceWireless article

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