SBC BLINKED

SBC Blinked
Unconscionability Challenge to DSL Early Termination Fee Results in $200 Refund

I personally have SBC Yahoo DSL at home, and actually, it's not a bad product, but SBC's attitude toward its customers sometimes reflects its monopolistic past. To get a good rate on the DSL you have to agree to a year's service. To get the best rate, you must carry a lot of extra services in addition to your basic local phone service. But that's not what I'm writing about, I'm writing about the early termination fee.

A client called and said that she moved with a month left to go on her DSL contract. She was moving to an area where SBC did not carry the DSL. She offered to pay the last month in advance. SBC said no, and hit her account with a $200 early termination fee. (Her last month's DSL bill was going to be $29.95 plus tax.)

Like always, my first step in contacting SBC is to try to get an address to send a written complaint. SBC consciously avoids publishing a written complaint address. By forcing you to use telephone complaints, reconstructing a dispute is reduced to a he said - she said argument regarding telephone conversations. In my experience, SBC's handlers only retain information favorable to them, anything unfavorable tends to vanish.

I sent a written dispute to the Indiana Utility Regulatory Commission arguing that SBC's early termination charge was void as a penalty under common law. (Liquidated damages clauses are only enforced if the actual damages can't be determined and if the liquidated damage amount is not disproportionate to the actual loss.) As a secondary argument, I argued that SBC failed to mitigate its damages by accepting the amount that the client tendered (which would have amounted to full performance of the contract.) I still haven't heard back from the Utility Regulatory Commission, but SBC blinked and they credited my client her $200.00.

If you get an SBC (or other carrier) early termination fee case, I suggest that you get the client to offer the total amount remaining on the contract. If the carrier refuses, your argument that the early termination fee is a penalty is pretty strong, and you should be able to press it forward to a successful conclusion. If the client is in collection, use the "void as penalty" argument in your dispute with the bill collector. Make sure the disputed status of the account is reflected on the credit report. If they foolishly keep it as a undisputed debt on the credit report, consider making the credit report case the focus of your efforts.

While you are at it, levy a complaint against SBC (or whomever) for failing to publish a billing dispute address. The Fair Credit Billing Act requires this, but the telephone carriers claim that the Fair Credit Billing Act is not applicable to them.

(By the way, my client authorized me to summarize an account of her dispute in hopes that it would help other people who find themselves in a similar position.)