Lawsuit questions early termination fee
Qwest is facing a lawsuit that might have repercussions for every service provider that charges early-cancellation fees.
Qwest had attempted to charge two departing customers early termination fees (ETF) of $200 each. In neither case did Qwest have any record of informing those two customers that such fees applied. The two filed what they intend to be a class-action suit. The action was first reported by The Wall Street Journal (the WSJ’s copy of the suit is here).
The case is fairly specific, and merely informing customers that such fees apply would seem to inoculate service providers from the problem. The suit goes a step further, however, claiming that termination fees have no relationship to actual costs of termination.
The suit reads, “The purpose of Qwest’s ETF is not to compensate Qwest for any such costs, but rather to deter subscribers from switching to other Internet service providers, to prevent dissatisfied subscribers from canceling their Internet service and to increase Qwest’s revenue.”
In other words, there’s some potential that the suit might lead to an invalidation of ETFs, or at least of ETFs that cannot be economically justified.
Separately, Qwest declared a quarterly dividend of $0.08 per share. The quarterly dividend is payable on Dec. 5 to all stockholders of record at the close of business on Nov. 14.
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