U.S.: FCC Investigates on Early Mobile Termination Fees

The Federal Communications Commission (FCC) asked the four major mobile operators and Google to explain how they advise their customers about early termination fees (“ETFs”) due when they cancel service contracts early.

Mobile operators Verizon Wireless, AT&T, Sprint Nextel, T-Mobile USA and Google have until 23 February to inform the FCC on how they disclose early termination obligations.

Since there is no industry standard for the fees, consumers must be able to understand what they are signing up for when they choose a service plan with an early termination fee, according to the letters the regulator sent to the companies.

U.S. service providers typically require customers to sign two-year service contracts in exchange for a discount on handset prices. Since carriers pay for part of the cost of the phone the fee is their way of recouping that amount if customers leave before paying for two years of service.

The FCC asked the companies to detail how each discloses early termination fee information to consumers in advertisements, in statements on corporate websites, in brochures and sales scripts and in monthly bills.

“The absence of a standard framework makes it especially important that consumers have a clear understanding of terms and practices of individual companies, which will allow them to compare services offered by different providers on a clear and consistent basis,” the FCC said.

INTUG