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Verizon Defends Doubling of Early Termination Fee

Anonymous Coward writes | more than 4 years ago

2

I Don't Believe in Imaginary Property writes "Verizon is defending its decision to double its Early Termination Fee from $175 to $350, after being called to account by the FCC. They claim that it's because it allows them to offer more expensive phones with a lower up-front cost and that, because they prorate the fee depending on how much of your contract is left, they still lose money. Apparently doing something about the Verizon customer service horror stories isn't as good a way to retain customers as telling them that they have to pay several hundred dollars to leave."
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How it SHOULD work... (1)

jonwil (467024) | more than 4 years ago | (#30498124)

1.Verizon picks an amount for the value of the phone (this would be the value that the phone would be sold for outright), call this number X.
2.Verizon then picks an amount for the upfront cost of the phone (whatever Verizon thinks they need to sell it at), call this number Y.
3.Take the number of months in the contract, call it Z.
4.Take the number of months remaining in the contract, call it W.
5.The ETF is then calculated as ((X - Y) / Z) * W.

Re:How it SHOULD work... (1)

William (Dthdealer) (1704286) | more than 4 years ago | (#30502764)

1.Verizon picks an amount for the value of the phone (this would be the value that the phone would be sold for outright), call this number X.
2.Verizon then picks an amount for the upfront cost of the phone (whatever Verizon thinks they need to sell it at), call this number Y.
3.Take the number of months in the contract, call it Z.
4.Take the number of months remaining in the contract, call it W.
5.The ETF is then calculated as ((X - Y) / Z) * W.

This would be a great idea, but it means more people would be exiting the contract early, as it gets to its end. This would probably all add up to less income for the big companies. And then there is also the fuzzy of when exactly the customer 'terminated' their use of the contract. Was it when they used the service last? Was it the date the termination request was sent or the second they decided in their head to do so?

People don't look at the termination fees when they buy a new phone/deal - they look at how much it costs to enter and how much it costs to use ( and sometimes not even that ).

*insert falling off cliff sound effect*

Contract or deal companies using scare tactics to stop customers leaving. Hmm... I swear that's a 'do be evil'. It's just as bad as advertising a product which (once you have paid for it) comes with free bonus products. Wow! I can get free things by paying for them!

Although Verizon has showed their enthusiasm to earn more ( being one of possibly millions of companies to do so ), the solution really is to educate those who agree to the contracts. The companies have a right to 'compensation' because the customer quit the contract early ( as the company didn't receive the projected income ), but it still boils down to caveat emptor

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