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T-Mobile Agrees to Settle Early Termination Fees Lawsuit

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T Mobile USA has proposed a settlement of a lawsuit against the company for charging early termination fees (ETF) to customers who close their account before their contract has expired. Under the terms of the agreement, which is still waiting for court approval, the company would make a payment of USD11.5 million to customers affected between July 1999 and Feb 2009.

The lawsuit alleged that T-Mobile broke both federal and local state laws when applying the charges to early terminating customers.

Under terms of the proposed settlement, customers who paid an ETF can receive compensation of up to US$125. Customers who were charged an ETF but did not pay and did not receive a full credit within 30 days, can receive up to US$25.

Existing customers who had a termination fee applied to their contract will receive a "non-cash" settlement - typically free minutes or texts added to their monthly account for a period of three months. The non-cash settlement is worth USD2 million on top of the USD11.5 million being put into a fund to settle cash payments. The U.S. District Court for the District of New Jersey will hold a hearing on June 24, 2009 to decide whether to approve the Settlement.

Rival operators, Verizon Wireless also settled a class-action lawsuit over early termination fees for $21 million last July, while Sprint Nextel settled for USD73 million. However, Sprint Nextel is now facing a possible class-action lawsuit which has a potential liability for USD1.2 billion if awarded in full.

On the web: ETF Settlement

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