ATandT Offers $18M to Settle ETF Complaints

AT&T files an early termination fee settlement in a New Jersey U.S. District Court, offering customers who filed a class action complaint $16 million in cash and $2 million in other benefits.

AT&T has filed a class action settlement in a New Jersey U.S. District Court regarding customer complaints about the company's flat-rate early termination fees. Although the document is dated Sept. 15, 2009, those involved in the lawsuit were notified Jan. 26.

The carrier has offered $16 million in cash plus $2 million in "non-cash benefits" as a settlement to those who submit a claim by June 14. A document posted to a site not run by AT&T states:

""The Settlement Class includes all current or former customers of AT&T Mobility or its predecessor in the U.S. who paid or were charged a flat-rate ETF at some time during the period January 1, 1998 through November 4, 2009, and/or who have or had a contract for service with AT&T Mobility that included a flat-rate ETF ...""

Those who ask by March 24 to be excluded cannot object to the settlement and are eligible for no money, but retain their right to sue individually. Those who do nothing will "get no money or compensation and give up your right to sue regarding issues in the case," stated the document.

The move follows government criticism of Verizon Wireless' ETFs, which the carrier announced on Nov. 5 would double to $350 for certain subscribers who cancel their contracts early. The FCC later sent letters of inquiry to AT&T, Google, Sprint and T-Mobile about those carriers' ETFs.

"Changing your wireless provider shouldn't break the bank," Sen. Amy Klobuchar said in a Dec. 3 statement. "Forcing consumers to pay outrageous fees bearing little to no relation to the cost of their handset devices is anti-consumer and anti-competitive."

That day, Klobuchar with three other senators introduced the Cell Phone Early Termination Fee, Transparency and Fairness Act, which would prevent carriers from charging ETFs higher than the discount that the carriers offer to consumers for entering into multiyear contracts.

The proposed legislation would additionally prorate ETFs, enabling customers who remain in their contracts longer to pay less. In this vein, the AT&T settlement offers repayment reflective of the amount of time left on a contract when an ETF was applied.

"The claimant shall receive an allowed claim in the amount to be determined by the number of months left on the claimant's contract at termination," stated the Sept. 15 document.

For example, a claimant with three months left on a one-year contract would be eligible for a "Maximum Cash Benefit" of $110, while a claimant with 19 to 24 months left on two-year contract would be eligible for $25.

"The court has not decided whether the claims in the lawsuit have any merit. However, if you are a member of the Settlement Class, you have a choice to make now," the settlement document said.

The court will decide on April 14 whether to approve the proposed settlement.