An early termination fee — and now, a collection agency

An early termination fee — and now, a collection agency
Cellular tower, waiting to be disconnected. / Photo by Gary Lerude – Flickr

Question: I am having problems with Verizon Wireless and I hope you can help me. A few months ago, I heard about a way to get out of my contract without paying an early termination fee. Verizon was changing the terms of its contract by increasing a regulatory fee, and we had 60 days to opt out.

I contacted Verizon and told them I wanted to end my service. The representative was very friendly, said she understood. I confirmed on her recorded line that I would not be charged an early termination fee, and the day my service would be discontinued. On that same day, I ported my number to another wireless carrier.

A few weeks later, I received a bill for the early termination fee. When I called, I explained everything to a representative, who just kept repeating over and over again that I had broken my contract and I had to pay the fee. I called multiple times and got the same response.

Then, about a month later, I received another bill from Verizon — this time for over $500. In addition to the early termination fee, they had billed me for a full month after I terminated my service with them. I called and got a representative who explained that when a customer terminates service, their standard procedure is to keep the account open for a full month because that’s how long it takes to port a number.

That’s nonsense. The port completed the same day I requested it. They said it didn’t matter that I was told on the recorded line my account would be discontinued or that I wouldn’t be charged an early termination fee, that their procedures and my contract dictated I would be charged both the fee and for the extra month of service.

I refused to pay.

Now, a collection agency is calling my home and my work seven to ten times a day, demanding I pay in full. I feel like I’ve reached a dead end with Verizon. When I call, they won’t even let me talk to a supervisor anymore.

Please help me. I do not have the funds to pay this bill, nor do I feel like I should have to – Verizon needs to keep their word and stop harassing me. When I asked Verizon reps to track my original call and listen to the recording, they have refused. — Christopher Clauson, Chisago City, Minn.

Answer: Verizon should have canceled your service immediately and without penalty. Why? Under the terms of your contract, Verizon specifically says if it changes its contract, you can get out without paying an early termination fee. It’s one of the most popular ways to escape from an onerous cell phone contract (only to sign yet another onerous cell phone contract).

The representative you spoke with about the balance due gave you inaccurate information. According to your contract, cancellations become effective on the last day of that month’s billing cycle, and you are responsible for all charges incurred until then. So it appears the rest of your bill is in order and needs to be paid.

When any company agrees to waive a fee — and especially a cell phone company — get it in writing. Having a friendly representative promise you won’t be charged a fee isn’t the same thing as having written proof. I understand you had no choice but to take her word for it, but you could have asked her for a written confirmation, and that might have prevented this ridiculous problem from ever happening.

When you contacted Verizon to clear up the misunderstanding, the company should have agreed to go back to its call records instead of throwing the book in your face. But what you didn’t know is that Verizon only keeps 30 days worth of customer call records, so the employees you spoke with weren’t refusing to review your calls. They couldn’t.

Again, sending it a copy of your agreement, and showing the contract change, should have been sufficient. Also, had you kept your complaints in writing as opposed to calling, you would have had a much-needed record. Those can always be forwarded to John Bianchi, Verizon’s top customer service executive, if you’re getting the runaround. (By the way email addresses at Verizon are firstname.lastname@verizon or verizonwireless.com, so you can easily figure out Bianchi’s address.)

I contacted Verizon on your behalf. A representative contacted you by phone and was, in your words, “a bit condescending,” but the bottom line is that the company agreed to call off the collection agency. Verizon also agreed to erase the $350 early termination fee, but it billed you for the rest of the month, per your contract, which you agreed to pay.

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at . Got a question or comment? You can post it on the new forum.

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  • Cybrsk8r

    I really couldn’t vote since I’ve never had to deal with them as far as canceling a cell phone. I have a pre-paid phone with them, and for me, that’s the only way to go.  But it seems like all cellphone companies make quitting as difficult as possible, so their customers will just grin and bear it when service is lacking.  I mean, look how they kicked and screamed and dug in their heels to stop customers from porting numbers.

  • http://flyicarusfly.com/ Fly, Icarus, Fly

    “Get it in writing.”

    Words to live by.

  • http://www.facebook.com/CarverFarrow Carver Clark Farrow

    As an aside, if a collection agency calls you, you can instruct them to cease calling you.  This is of course best done in writing via certified mail, return receipt.  If its an outside collection agency they should stop.  The letter won’t be effective on inhouse collections though.

    There are some exceptions and limitations, but its a good rule of thumb.

  • backprop

    Verizon does make it too hard to cancel.  But then so do all the big wireless carriers.  The issue seems to be a very American-centric one.  We want the best new smart phone, we want it now, and we don’t want to pay a lot up front.  So we get a subsidized phone and put ourselves into these long contracts with severe termination penalties.

    It would be so nice to have plans unbundled from phones.  Then carriers could compete on the basis of their rates and service, rather than luring consumers who want a particular phone based on the carriers’ contracts with manufacturers (see iPhone until recently).

  • john4868

    I don’t think Verizon makes it too difficult to cancel phone service. All it took was a single phone call to cancel the contract. I wouldn’t call that difficult.
    They do make it expensive but there’s a reason behind that. When you sign your contract, almost everyone gets a subsidized phone (free or at a reduced cost). In reality, the cost of that phone is priced into your contract. When you leave
    early, the phone company has the fee to recover the cost of the phone (and dissuade you from moving prior to the end).

    If you don’t like ETFs, there is an easy solution. Go in and purchase your phone at an unsubsidized rate. If you do that, most phone companies will let you go onto a month to month contract.

    Edited for readability

  • EdB


    It’s one of the most popular ways to escape from an onerous cell phone contract (only to sign yet another onerous cell phone contract).”

    The cellphone companies have justified the early termination fee because of the subsidized phones.  It was only after a lot of legal fighting the companies agreed to reduce the fees based on the length left on the contract.  

    Now it seems they are trying a new tactic to get you roped in.  I have a family account on a major carrier and went to add a new line, but I was providing my own phone.  They tried to require me to enter a new two year contract, complete with the large early termination fee even though I was supply my own phone!  They were not subsidizing anything and given I was already on contract for the other 3 lines, this made no sense to me.  It was only after I started canceling my service did they agree to waive the two year contract on that new line.

    The cellphone companies are doing everything they can to get you under a contract and keep you there with no easy way to get out.  Probably a better question would be to replace “Verizon” with “cellphone companies”.

  • EdB

    In the story though, it said the service continued until the end of the billing cycle.  I’m not sure about Verizon, but with my contract, I pay a month in advance and thought that was standard practice with all carriers.  It confuses me as to how they ran up over $150 (collection amount was over $500 with $350 being the early termination fee) with a disconnected phone line.
    Also, from the last legal fight over the termination fee, they are suppose to be on a sliding rate so the longer you have the contract, the less the fee.  If they were charged the full $350, it sounds like they tried canceling only a month or so into it.  Either that, or there is more to the story that is missing.

  • EdB

    On the contrary.  From the story, it sounded like it was very easy for the OP to cancel with Verizon.  It was just very expensive, and unjustifiably so.  

  • sirwired

    Pre-Paid is the way to go now.  I’m on Page Plus Wireless… $80 gets me one year of service (which takes six dollars of that balance) 4-cent minutes and 5-cent texts, all on the Verizon network.  No contract, bring your own phone.  (Any Verizon phone except pre-paid units will generally work.)

    They also have data-heavy, unlimited, and short-term/cheap plans.

  • NakinaAce

    It is all well in good for you to keep telling people to get it in writing but you know that is basically not going to happen the way these things are structured. Most of the time the person you are talking has no way to get things to you in writing and if they did it would have to go through several layers of bureaucracy each one of which would tell the employee they are not doing a good job if they have to put things in writing to customers.

    I despise the plaintiffs bar (ambulance chasing lawyers) but you Elliott if you wanted to could serve as a clearing house for these complaints and potentially allow groups to get together and file suit against these companies. It is a sad fact that now, along with the federal government, all these big companies treat their customers or citizens as a target to be shot at and fleeced rather than what they are – the people that ultimately pay their salaries.

    A sad comment on the state of the United States and our commercial entities.

  • NakinaAce

    Please tell me where you can purchase an unlocked phone in the US that is intended for use in the US?

  • http://profile.yahoo.com/YWYA4K2U6P42XUXKT6NVWJF76A Richee

    Very simple if it’s not in writing it never happened.

  • Scott

    Not exactly truly “unlocked” but the new Verizon version of iPhone 5 can be used on ATT network. :)

    http://www.nbcnews.com/technology/gadgetbox/verizon-wireless-says-iphone-5-wont-be-relocked-1B6078242 

  • http://pulse.yahoo.com/_KNWGYGW4LEIVCJOAFKIIHRSZOM nicole j

    I had problems with them as well.  In the last month of my contract – which I paid for – i ported my number.  It was ten days before the last day of my contract because that is when I had time.  I figured I had paid for the last month of my contract so it was my choice as to if I used the service.  They tried to charge me $175 for not using the services that I had paid for.

  • 1234gotts5

    I moved 500 miles north of my previous residence in 2008.  I sent my cell phone carrier a change of address, in writing (kept a copy of the letter).  They kept sending my monthly bills to the old address and eventually the bills would be forwarded to my new address.  Most months, I was late paying the bills.

    After about six months of this I started telephoning the carrier, asking them to change the address and stop sending the bills to the wrong address.  “Oh yes siir!”  But they didn’t stop, and the penalties for late payments kept piling up.  Eventually I gave up:  I wrote the carrier and terminated my service with them, citing their failure to live up to their service agreement.  I was immediately slammed with a $500 early termination fee, in addition to the $250 I still owed them.  I paid the $250.

    I refused to pay the rest, citing their failure to live up to their own service agreement.  After about a year, my account was turned over to a collection agency.  They wrote to me and I wrote back and explained why I wasn’t going to pay.  They called me, and I politely declined to speak with them — I told them that every communication with me must to be in writing.  After another year of this back and forth, the account was sold to another collection agency.  Same routine.  The the carrier was sold to another carrier and the account was sold to a third collection agency.  Same routine.

    So far, I’ve spent about $3.00 in first class postage.  I haven’t heard from anyone further in about a year.  Maybe the new carrier realized that it was spending more on the collection agencies than they would ever get from me.

  • john4868

    Any corporate store for a carrier will sell you one as long as you pay the entire amount upfront. All you have to do is ask for the unlock code. Beyond that, a number of cell phone manufacturers will sell you an unlocked phone directly that includes Apple.

  • http://thestockhome.com/ Josh S

    Yeah, but a lot of these places refuse to put it in writing if they don’t have a standardized form letter for it (which they obviously decline to have). Or worse, they promise to send you the letter in writing, but it never materializes/gets ‘lost’ in the mail/otherwise becomes vapor.

    A good option is to record the call yourself by using a service like Google Voice. They have already consented by way of telling you that THEY are recording, so if you’re in a ‘two-party consent’ state, you should be covered. That way, you have the confirmation that they indeed agreed to waive fees, etc. I recommend to do this on any call where you’re agreeing to terms or cancelling a service. 

  • cjr001

    This is a typical example of how bad customer service has gotten in general in all areas.

    Years ago when we went to drop Sprint, I had a hard time with them for supposedly cancelling one day before my contract ended, when I in fact cancelled the day my contract ended.

    SOP: bleed the customer dry.

  • Jaybird248

    The termination fee would be less if the phones were less costly. It’s outrageous that Apple charges $600 for a volume product built by $1 per hour Chinese labor. Of course, that’s why Apple is the most valuable company in the world, by stock value, because it can get away with such prices.

  • cjr001

    The fact that we have to jump through such hoops and spend extra money (in sending certified letters) just shows how completely broken the system is for the average person. :(

  • TravelingSalesman

    Maybe I’m in the minority on this, but when I signed up for my Verizon account, I knew there were fees to cancel early.   I got a state-orf-the-art phone for $19.95 and (in California) I had to pay tax on something like $200.00.
    I just got a new phone from a company that has unlimited everything with no contract.  A good phone cost me $379.00 and I paid it gladly just to avoid the contract (and get a far lower price.
    The major players in the cell business got us hooked on “deals” for phones  that were almost free, but we pay by the month for them along with our service.  You sign up for that, you gotta pay for that.

  • tio2girl

    I totally agree that getting it in writing with the way they set their customer service system up is easier said than done…and they know it.

  • AAmerican1

    The FDCPA (Fair Debt Collection Practices Act) prohibits a third party collection agency from pursuing a debt once they have been notified the amount they are collecting is in dispute. Once notified, if they continue to contact the debtor they are subject to a fine and further sanctions by both the Federal Trade Commission and the state Attorney Generals office of both the debtor and the collection agency. A copy of a cease and desist letter can be found at ftc.gov and it should be sent certified, return receipt requested. In the U.S. the debtor is not obligated to negotiate with third party collectors and have the right to fire them simply by sending them a cease and desist notice.

  • severnwatcher

    eBay – bought a number of them…You can also buy almost any phone, and go into the inter city to one of those fly-by-night cellphone stores and pay 10 -20 bucks and they will do it…

  • Trudi

    Verizon’s contracts can be difficult to understand. They are filled with legalese that is complicated and confusing. They also use intimidating practices (a collection agency!) to keep customers. We have a contract with the, but together my husband and I read the entire thing, highlighting parts we may need to refer to in the future. We’ve managed to keep their cellphone service with no problems, but other people we know have had trouble with them. Get it in writing and read it – it’s the best way to know what you’re doing.

  • LeeAnneClark

    Y’know, it drives me crazy when people say “how can they charge XXX dollars for something that only costs $1 to make?” 

    Do you really not take into consideration the cost of development?  Do you have any idea how much it costs to design, engineer, and test a product like that?

    I work for a biotech company that makes medicines for catastrophic illnesses.  I constantly hear people say “how can they charge that much for a drug that only costs $1 to produce?”

    I guess the fact that it cost over a billion dollars to develop it, and ten years of clinical trials to get it to market, doesn’t count.  We should ONLY charge the amount of money it takes to make the pill, and write off the billion dollars we spent inventing it.  Right.

    This is a pet peeve of mine.  People really need to gain a better grasp of how a free economy works.

    As for the iPhone, they are charging what the market will bear.  People will pay it because they want the product.  It’s not “outrageous” – they have a right to charge whatever they want for it.  If you don’t want to pay it, don’t buy it!  I think it’s outrageous that they charge so much for Ferrari’s too.  Those greedy buggers!  It can’t cost more to build than a Pinto, so why should I pay more?  ;-)

  • Joe_D_Messina

    I’m a bit confused on what EXACTLY the OP should have done. I fully understand that doing things in writing has some advantages, but is it actually possible to do this over the phone like the OP tried?   Or do you HAVE to send in a copy of your agreement so they can verify there’s been a change to the contract?  Was the root cause of the problem that the OP either didn’t do that or wasn’t told to do that?

    In one place Chris says the service should have been stopped immediately…but then later on he talks about how sending in the agreement should have been enough. Which is it?  If it actually is possible to do over the phone, that would mean customer service could verify contract changes on their own. But if that is the case, why on subsequent calls did they claim the contract had been broken. (And if they don’t have contract details, how could they tell the OP for certain the contract had been broken?)

  • Rachel

     Yes, but have you checked your credit report?  I’m sure it was reported there and the damage from that alone could be very costly in the future. 

  • ExplorationTravMag

    I voted yes on this but it’s with a supremely uninformed mind that I do so.  We’ve been with only two cell companies for the 15 years we’ve had a cell phone and the transition was easy because we moved from one place with excellent coverage with Verizon to another place with no coverage at all.  We switched to Sprint at contract renewal time and it was all done very quickly and painlessly.

    I hear/read horror stories like this all the time and the reason has always been the same, I made the change before my contract was up.

    This is the line that kind of jumped out at me:  I heard about a way to get out of my contract without paying an early termination fee.

    Apparently, this is a huge problem for cell providers is buyer’s remorse and people looking for ways to get out of paying an early termination fee.  I’ve also seen cell companies jump through hoops to keep your business.

    In the years we’ve been with Sprint, I contacted them about the lack of service at our home.  Since we’re always in roam, unless you stand in the bathtub in the master bath (which  my son discovered), they sent us at no additional charge an antenna for our home.  When they raised some rates, I called to have it explained more fully and express some concerns.  They put in place a reduction for a year.  I could go on with what they’ve done for us, not because they asked but because they want to keep us as customers.

    I just think a cell service making changes to their regulatory fees, something that’s out of their control, is a bit of a white herring.  Since Verizon was caught throttling their “unlimited data” a lot of customers have been jumping ship, using any port in the storm to break their contracts. (And a few more metaphors mixed in the process)

  • Joe Farrell

    Phone call from collection agency:

    “I do not owe your principal anything.  I dispute the entire amount.  Further phone calls will be deemed harassment.  If you intend to sue me – please do so.  The contract with Verizon has an attorneys fee clause and an arbitration clause.  If you wish to commence an arbitration, please do so immediately or stop calling me.  I invoke all rights under the Fair Credit Billing and Collections Act and assert that I owe your principal nothing.”

    “Dear Verizon:  You are dunning me for an early termination fee you are not entitled to collect.  I hereby request a copy and transcript of a telephone call on [date] and [time] wherein I canceled my contract after you raised a regulatory fee, which is permitted under the agreement.

    “You have a collection agency calling and harassing me for a fee you are not entitled to under your contract.  If this does not stop I shall contact an attorney. I remind you that your contract contains both an attorneys fee clause wherein I would be entitled to attorneys fees if I prevail, and that it further contains an arbitration agreement and your collection agency is threatening to sue.  A right you do not possess under the contract.

    You have ten days to stop your agent from trying to collect a debt you are not entitled to collect.  Please send a copy and transcript of that phone call within thirty days as well.”

    That should stop it all. 

  • Joe Farrell

    Since when are you requiring approval of comments . . .. Mr. Elliott?

  • Joe_D_Messina

    You only gotta pay what your agreement specifies. And Verizon’s contract allows you to escape early cancellation fees when they change the contract terms. That’s what this case was all about.  

  • Alecdjm

    All the iPhones can be bought unlocked directly from Apple
    iPhone 4 – $450 (starting at $0 subsidized)
    iPhone 4S – $549 (starting at $99 subsidized)
    (Both of these are the GSM versions)

    iPhone 5 isn’t showing an unlocked option yet.

    So – if you’re willing to pay the price, you can get one unlocked. 

  • http://mytimetotravel.wordpress.com/ mytimetotravel

    You can buy an unlocked quad-band phone that will work just about anywhere (not Japan and Korea) from amazon or ebay. You can buy a prepaid SIM with both UK and US phone numbers, usable about anywhere, from telestial or ekit.

  • LeeAnneClark

    Joe, he addressed this in a recent column – go back and check his columns over the last few days.  Hopefully it’ll stop soon, when we all learn to behave ourselves.  ;-)

  • emanon256

    Reminds me of the people who hire me to do IT Consulting, and are made aware of my rate up front, and then dispute my bill saying they are a hobbyist and they can’t be expected to pay the business rate.  I don’t have two rates, I do the same amount of work either way, why would I charge anyone less?  Also, many potential clients simply don’t work out because they want another rate because they are hobbyists, non-profits, or any other random reason.

    When the first few iPhones came out, I couldn’t afford them, so you know what I did?  I didn’t by one.  Just like I don’t have a Ferrari.  Business is better now, and I pre-ordered an iPhoen 5.  I can’t wait to get it in a few weeks.  I almost went with Verison, but went with AT&T instead because of the data and phone at the same time.  But I am sure AT&T will be just as bad as Verison if I try to cancel.  I still can’t afford that Ferrari ;)

  • emanon256

    Just curious, did they ding your credit?

    Also, I am not sure which carrier you were with, but mine has a clause in their contract that says that I am responsible for the balance by the due date, regardless of whether or not I receive a bill.  I guess this makes since as when I signed the contract, I was made aware of the monthly amount and the due date, so I know what I need to pay whether or not I get a bill.  Its just overages that I would find out about from the bill.

    Also, the bill is available on-line, which the balance and the due date, and I get an e-mail whenever a new bill is available.

    I still think your carrier was totally incompetent, but I would have handled it differently.  Also, I am not sure how sending a bill to your old address would void the contract.

  • emanon256

    Just be careful with this if it is a valid debt. I used to work in collections and if we had a valid account with evidence from the creditor, when we got a FDCPA cease and desist notice we went straight to court.  In most cases the debtor never showed up and we got a judgment, and began garnishing wages.  When the debtor did show up, we still won in almost every case as they never had a valid reason as to why they didn’t pay.  The only debt that sometimes got dismissed were the collection costs, or they were cut in half.

  • emanon256

    Since I can’t edit my last post, I am replying again.

    Just wanted to say that the carrier is not actually spending any money on collection agencies.  Collection agencies only get paid on what they collect, so if you don’t pay, they don’t get paid.  So they can keep gong at it.  They may eventually give up if they think the amount is to small to go after, but they could also sue you, so just be careful.

  • Raven_Altosk

     If only I could get the scam artist “Rachel from Credit Services” to lose my home and cell numbers…

    Seriously, if I find out where that call really originates from, I cannot be held responsible for my actions.

  • Raven_Altosk

     On this note, I’m really sick of the “Get your FREE cell phone if you are on these government programs” commericals.

    Have the program for those truly in need (as we had with land lines) but get rid of the commercials.

  • http://www.facebook.com/CarverFarrow Carver Clark Farrow

     @LeaAnne:disqus

    +1000

    Apples and others charge what they can.  I buy or not buy their product.  What’s the big deal?

  • emanon256

    WOW!  I haven’t seen those.

  • cjr001

    Well, at least it’s not just me. I thought something must’ve happened while I was out of town recently, but at least knew it wasn’t my fault for once. :)

  • AAmerican1

    Even if the debt is valid, under FDCPA, the debtor is under no obligation to negotiate with a third party collector (collection agency) and has the right to order them to cease & desist. State laws do vary and in many states collection agencies are prohibited from filing suit against the debtor, it has to be initiated by the original creditor.

  • TonyA_says

    Please explain to me what the OP did wrong.
    I can’t see why consumers cannot take full advantage of any or all loopholes afforded them in a contract when the other side uses every trick in the book to stick more and more fees to their customers.
    I suppose the wireless carrier knows that not all customers will use those loopholes and they have allocated the cost of the leakage to their monthly fees.
    That’s the risk they take for being in the business of including phones in their contracts.

  • Londoner1936

    Aren’t all the cell phone companies the same in this respect?   I agree with the following writer:  use a pre-paid (pay as you go) cell phone, and yes it is the only way to go.

  • Cybrsk8r

    I also want to get off their list.  They flood my answering machine with their useless garbage.  I’m afraid I’ll miss an important message because they’ll use up all my recording time.
    There might be a way to do it.  The robo-calling machine these scammers use will detect when it reaches a disconnected number.  It does this by recognizing those three tones.  You know the ones.  Well you can find those tones and download them.  If you put those tones at the beginning of your outgoing message, the robo-calling machine will flag your number as non-working and remove it from the data-base.  At least I’ve read that somewhere.  I have the tones and I’m gonna try it.

  • http://pulse.yahoo.com/_EUTS4TUFMGQZAZLOWGCYXX7D6E Roger M

     You can also buy a device called the Telezapper, which goes inline between your answering machine and the phone line. It also produces those 3 disconnect tones. Be aware, however, that some robocallers are aware of this, and will continue to call.

  • SallyLu

    I’ve also bought several phones on eBay.  You just call up your carrier and they’ll help you switch the service to your new phone.