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Verizon Implements New Policies In Face Of Defense Of California Class Action Regarding Cancellation Fees

Both the Los Angeles Times and Yuki Noguchi of the Washington Post report today on yesterday’s announcement by Verizon that it will soon implement a fundamental change in its cancellation fee policy for cellular telephone subscribers. In the face of a California class action that the Times reports seeks “to recover early cancellation fees from Verizon Wireless and Sprint Nextel,” the company will calculate the early termination fee based on the proportional amount of time remaining on the subscription agreement.

Verizon’s defense against this California class action is not a lone event. Similar class actions are pending in several states, the Washington Post reports. In fact, the Post reports that early termination fees ranks third on the list of complaints against cellular telephone companies, and the Los Angeles Times quotes Verizon CEO Denny Strigl as identifying this issue as “the single largest [complaint] that our customers have.” As Mr. Strigl candidly admitted, “It’s a legitimate complaint: If they leave in month one or month 23, they pay the same charge.”

Verizon also will reportedly begin offering to existing customers the same discount for new handsets that it offers to new subscribers.

Noguchi’s article, entitled “Verizon to Reduce Contract Termination Fee,” may be found in the June 29, 2006 edition of the Washington Post. The Los Angeles Times article, entitled “Verizon Wireless to Prorate Cancellation Fees,” may be found in the business section of the June 29, 2006, edition of the Los Angeles Times.