Early termination fees on wireless contracts one step closer to termination

The little play on words is obvious. Consumers are just a little bit closer to being free of early termination fees on wireless contracts. A California judge ruled this week that it was illegal for Sprint Nextel to charge early termination fees, and they must refund over $18 million to consumers. The company must also stop trying to collect over $54 million in unpaid early termination fees from former customers.

Of course, Sprint Nextel is going to appeal so we shouldn't get too excited yet. But this ruling is good for consumers, who are at the mercy of wireless providers who are looking for any excuse to get a little more money out of each of us.

The whole idea of an early termination fee is ridiculous. If you want to stop using our service earlier than you planned, you have to pay a couple hundred dollars. To not use the service.I suppose in theory you could argue that the fees protect the wireless providers who need to give consumers an "incentive" to stick with them. They might expand their networks based upon their number of subscribers, and if customers can come and go as they please, they could lose a lot of money on unnecessary expansions.

They also sometimes give free equipment or free minutes to entice customers to their services. The early termination fees help recover those costs.

On the other hand, consumers should be free to pick and choose their service providers. Why force customers to stick with you? Why not provide great service at competitive rates so that customers actually choose to do business with you? Wouldn't that be a better business model? And shouldn't free be free? If a company gives someone free stuff to try their service, and they decide they don't like the service or don't want the expense, shouldn't they be free to leave?

But apparently customer service isn't the main focus of wireless companies in the United States. It's much easier to penalize customers who try to find companies with better service and better prices. After all... how will wireless carriers keep their customers if they can't punish them for leaving?

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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