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Verizon Wireless has agreed to settle a class action lawsuit, again. Not again as in yet another suit, but again because they had already settled it but it was held up due to appeals. Verizon agreed to pay approximately 175,000 members of the class action lawsuit $21 million over accusations that it wrongfully applied early termination fees to customers when they terminated service.
While $21 million sounds like a lot of money, it works out to about $120 per person, before the attorney’s take their fee. After fees each class member will likely receive around $80. Verizon says the settlement ends all lawsuits against the company over early termination fees. The funds are being held in escrow and the distribution of checks is expected to begin around October.
In a sign of just how long litigation can take, the case originally began in 1999. The lawsuit originated after Verizon allegedly extended user contacts anytime a customer made any change to their plan. Customers were often under the impression that their contact term had ended and instead found themselves on the hook for a $175 early termination fee.
After public outcry and media attention from lawsuits against most of the major cellular carriers, the companies changed their practices. Most created pro-rated early termination fees, where after each month of service the cost to end the contract goes down. Early termination fees exist because consumers get their phones at a discounted rate that is subsidized by their monthly phone service contract.