How to Waive Early Termination Fees
Ben Kurland | December 1, 2016
The scariest part of any telecom contract is the dreaded early termination fee. They go by many names, cancellation fees, contract termination fees, early cancellation charge, but you probably know them by a three letter acronym for early termination fee—ETF. Early termination fees, or ETFs, are part of the bargain with a telecom provider. They give you cell phone or internet service at a “good” rate for a few years, and you promise not to cancel. And if you do, you’ll pay for it in the form of an ETF.
So, what happens if something changes in those twelve months—you have to move or your business closes shop, and you’re stuck holding the bill? Here’s our guide to waiving early termination fees wherever you find them.
Telecom Early Termination Fees
Before we can get into how to waive early termination fees, it’s important to get a little background into what telecom ETFs are and why they’re such a problem. If you just want to get onto the tips, you can skip this part. There are many ridiculous stories about people getting stuck with cancellation fees on their cell phone, internet, cable, or satellite bills.
Take, for example, Lauri Rule, who set up Dish service for her mother. When her mother died, they charged her daughter a $400 early termination fee to cancel the service. That story has a (somewhat) happy ending, but only because Rule went to the press and shamed Dish into making a public apology and waiving the cancellation fee. Unreasonable ETFs like that are such a problem that in 2016 New York State passed a law banning ETFs for the deceased.
After many disasters—like floods, hurricanes, and wildfires—stories like this one in Tampa Bay pop up on local news outlets about companies charging early termination fees to customers who are without services for weeks or even have their homes destroyed. Even in situations like that, getting a company to waive early termination fees can seem impossible.
And, while early termination fees for consumers can be hundreds of dollars, for small (and large) businesses, the stakes are even higher. Early termination fees can hit especially hard for people who work from home or small businesses that use business internet. Instead of caps of $240 or $480 dollars, like many residential contracts have, cancellation fees for business telecom service often have no limits at all and skyrocket into the thousands or tens of thousands.
In Nashville, a graphic artist and web designer moved across town and tried to take his Comcast service with him. When he found out that his new address (despite what Comcast promised) wasn’t serviceable by Comcast, he had to cancel and received a bill for $2,789 for an ETF the rest of his service that he wouldn’t use. When he tried to have Comcast waive early termination fees on the business account, they told him tough luck.
That’s because, for Comcast’s business class early termination fees, you’re liable for “seventy-five percent (75%) of the remaining monthly fees that would have been payable by Customer under the applicable Service Order if the terminated Service(s) had been provided until the end of the initial Service Term.”
Terms are often even rougher under business specific telecom contracts. For businesses with services like fiber, VoIP, or really any business telecom services, you’re likely to find yourself in real trouble when it comes time to cancel. Major providers like Level 3 and Integra charge 100% of your remaining charges as an early termination fee.
The Legal Option
Business early termination fee clauses can be especially nasty—charging you for pass-through taxes they won’t have to pay or charging you for service charges that otherwise been discounted or waived. And they’re very, very specific that, under liquidated damages provisions, these are “damages” that they’re accruing and not a penalty for cancelling service. As Level 3’s agreement says, “customer acknowledges that the charges in this Section are a genuine estimate of Level 3’s Actual damages and are not a penalty.”
Of course, this isn’t a completely unreasonable argument for some of the charges. Putting together a contract for you does cost money for telecoms—they have sales teams to pay, service calls to make, infrastructure to maintain, sometimes even lines to construct or build. Early termination fees from telecoms aren’t put together by cackling supervillains. But 100% of your remaining charges can’t possibly be the actual damages for a company. For that to be the case, they’d have to be saying that they operate at exactly break even for your services. So, why do they say that?
Going to court is an effective, but expensive, option to waive early termination fees.
In the United States, companies can’t assess a penalty for nonperformance of contract. The details of penalties vs. liquidated damages are complex and varied, so if you want to learn more about it, here is a pretty digestible explanation. If you’re really interested, here’s a little more background if you want. We’re not your attorney and can’t give legal advice, but if you think that the early termination fee is actually a penalty and not a liquidated damage, you may be able to have the amount reduced by a court. Of course, that has downsides.
Almost any telecom contract you sign is going to be to the advantage of the telecom company when it comes to trying to fighting to waive early termination fees on legal ground. For one thing, you’re almost certain to be bound by an arbitration clause and you’re likely bound by the laws of their home (or preferred) state. Not to mention that any contract you’re under is likely incredibly long, carefully worded, and there’s almost no chance that you actually read it in full. That being said, a legal case is always going to be your last line of defense against unfair contract provisions like early termination fees.
If you’re going to make a legal case against a telecom provider over a cancellation fee, it’s going to have to be over some serious money. In most cases, the legal costs alone are going to rack up fast enough to not make it worth it. That’s why you don’t end up seeing very many early termination fee cases actually going to trial.
That being said, there have been cases where judges have reduced or waived early termination fees for contracts. In California in 2008, Sprint clients won a ruling of almost $75 million for illegal early termination fees. It turned out that a jury had awarded Sprint $226 million from the same clients, so it ended up that nobody has actually benefited yet. (However, the claim filing deadline is open through April, 2017 if you happen to be a Sprint client who got an ETF between 1999 and 2007 in California.)
Don’t want to waive your early termination fee yourself?
If you can’t or don’t want to negotiate yourself, we can help. Our expert negotiators work with telecoms to reduce or waive ETFs entirely. If we’re not successful, there’s no charge at all.
Better luck has come in cases of settlement. That same year, Verizon settled an ETF case for $21 million to avoid a long and costly lawsuit. As a result of these cases and pressure from the FCC, residential providers switched to their pro-rated ETFs with lower limits. However, limited pressure has kept them from making similar moves with business ETFs. Cancel
Filing a lawsuit to waive an ETF may work out in your favor precisely because companies like Verizon want to avoid the legal costs that come with those disputes. A residential client sued Dish Network over a $165 cancellation fee in small claims court and Dish never even showed up, granting the ruling to the plaintiff by default.
A small class action was filed by three Comcast Business Class clients in Philadelphia in 2013. Charged just over $1,100 by Comcast, the three were looking for a ruling on Comcast’s contract fees. Instead, Comcast reached out and offered to waive the business class early termination fees in full. They even offered $12 for an equipment fee that one of the clients felt was overcharged. The plaintiffs actually refused the payment, hoping to take the matter to court, but because Comcast had already offered to pay in full, the case was dismissed.
So, there is certainly some evidence that telecoms skittish about litigation will cave to reasonable demands rather than deal with a long, costly, and difficult legal process. Still, those difficulties apply to you as well and before pursuing legal action, it is likely to be beneficial to reach out to the company directly to try to resolve the dispute. If you’re going to try to waive early termination fees on your own, you’re going to want to come prepared.
Do Your Research
The first thing you’re going to need to do is clear your calendar. Waiving the early termination fee from you business telecom contract isn’t going to be easy and it isn’t going to be quick—but it’s going to be worth it. If the money isn’t worth it for you or you don’t have the free time, you might want to re-evaluate this decision. You can either drop the matter entirely or hire a professional to handle it for you. But, if you’re feeling confident and have the time, let’s get started:
Step one: read your contract. It might take a while and it’s certainly going to be boring, but if you can find the perfect line to back up your argument, you’re set. If you can hassle a lawyer friend into reviewing it, you’re in even better shape. When you’re negotiating with these companies, you’re not dealing with the company itself, but some account rep somewhere. For the most part, they want to help—they just need an excuse. That excuse lies somewhere deep in your contract. You’re looking for two things: escape clauses and contract duties for the telecom. Let’s take those one by one.
For any early termination fee negotiation, research and knowledge are king.
Escape clauses, or out clauses, are clauses in your contract that allow termination without penalty. These are going to vary provider by provider. In some cases, you’ll be able to cancel for common causes like moving out of a serviceable location, but it’s not always that easy.
Let’s take a random telecom provider—Skyriver Communications in San Diego. Pursuant to their terms, cancelling customers are responsible for a whopping 100% early termination fee. However, if you cancel their service “pursuant to Customer’s termination rights relating to the AUP amendments pursuant to paragraph 5 hereof,” you might not be liable. If you move to paragraph 5, you’ll find out that AUP means “Acceptable Use Policies” and you’ll find that essentially what they’re saying is: “If we change the rules, we have to tell you. If you’ve got a problem with it, let us know. If we can’t solve it, you can leave with no ETF.” So, for them, all you have to do is keep an eye out for changes to their Acceptable Use Policies and get in touch within 15 days of the notice. You’ll have to go through their process, but at the end you’ll be free. But what if they don’t tell you?
That brings us to part two: contract duties. The contract is a two way street. If Skyriver promises that they’ll alert you to any AUP Amendments and they don’t, then they’re in breach of contract. If it’s determined that they’re in “material breach,” (another complicated legal question best left to your attorney) then they have to waive the ETF. Find out what the terms of the contract are and see if your provider has broken any of them.
“I don’t have time to sit around on the phone and renegotiate with these companies. BillFixers took a lot of the stress out of having to deal with negotiations and fighting back and forth to lower price.”
Evan Diamond, iCracked — $10,400 saved
Your service-level agreement, or SLA, is going to lay out the deal that you’ve made with the telecom. That includes not just the price and services, but a lot of little details. Take for example, 8x8, a massive VoIP provider, that announced last year that they were updating their SLAs to include 99.999% uptime. And they’re not just bragging—that’s a guarantee. The so-called “five nines” is a big deal. That means that if the service is out for more than a second a day, they’re in breach. So, if you’re a customer of a company that promises five nines uptime and your service was out for more than five and a half minutes in the last year, they might be in breach.
“High availability,” the agreed amount of uptime, is a common element of SLAs, but there are virtually unlimited options that might be hidden in your contract. If somebody else negotiated your telecom contract in the first place, contact them—they might know about provisions that they insisted on for just this situation.
While you’re looking at your contract, make sure to compare it against your bills. And then compare them both to real life. Telecom billing is sloppy and they never audit your bills to correct overcharging. The number of people paying for equipment they don’t have or services they haven’t been getting is astounding. Especially if those items aren’t in your original contract, you’re in a great spot to negotiate. If it turns out they owe you $5,000 in overcharge from your audit, you’ve got leverage. However, even if you don’t find any easy outs, there’s still hope.
Consider Your Leverage
The most important tool for negotiating your way into your telecom waiving your early termination fee is what you can offer them. Think about it like a set of scales. On one side is what your telecom can provide and on the other is what you bring to the table. Before you wanted to cancel, you’d agreed on (what they think is) a balanced set of scales. On one side, they’re providing you with 100mbps broadband and you’re providing them with $200 a month for the next year. If you want to take away $200 a month, they want you to put $2,400 on the scale to keep it even. If you remove that, the scale is unbalanced. So what can you do?
For this, you’re going to have to look at this from the perspective of the telecom—what do they want? If you don’t feel like an exercise in empathy, you can always just ask them. But there are going to be some easy ones that you might have just not thought of yet. Here are some questions to ask yourself:
How can you tip the scales of the negotiation in your favor?
1. Can you get someone else to take over the contract?
If you’re getting a decent deal (or even if you’re not), you might be able to find someone else willing to take on the contract. If you can find somebody looking for new service or who has service out of contract, that’s your best bet. If you’re cancelling because you’re moving or closing, see if you can get in touch with the new tenant in the space. For them, it might even be a convenience to not have to deal with installing equipment and tech visits. Reach out to other tenants in the building or other local businesses with similar needs. You can make your own deal—if you’re facing a $10,000 early termination fee, it might be worth it to offer $1,000 to the tenant next door to take yours off your hands. The telecom gets their payment, your neighbor gets internet, and you escape with $9,000.
2. Can you pay a portion of the ETF?
This is a similar idea—it’s just about tipping the scales somewhat. Unpaid accounts are a big problem for telecoms and they would always rather get something than nothing. Start off by saying you’re unwilling to pay anything and then work up to paying off a percentage. Paying $5,000 of that $10,000 is going to make them a lot more happy to let you off the hook for the rest and anything less than the total you can pay is always a victory. But make sure you have an agreement first. Once you make that payment, your leverage is gone.
3. Can you use a reduced level of service?
Depending on the terms of your contract, you may not be bound to your exact services. For Comcast Business Class, for example, you’re often bound to the different elements of your package, but not necessarily the exact detail. So, if you’re a dentist paying $89.95 for Preferred TV for the office, but you find that nobody is using it, you can downgrade that part of the package to $24.95 for Basic TV. By reducing your prices to their lowest level, Comcast gets to keep a client, but you end up paying significantly less—you just leave the contract to run itself out for a fraction of the cost.
4. Do you have other accounts with them?
Your contract doesn’t exist in a vacuum. If you’ve got multiple locations, you’ve got more power. If you can offer to add service somewhere else or threaten to pull other business, that’s more power for your side of the scale. Even if you’re planning to open an account with them in the future (or say you are), they’re more likely to be flexible in this particular situation.
5. Do you have something else to offer?
This one is the most open ended and it’s going to vary provider-by-provider and situation-by-situation, but you may have something that makes it worthwhile for them. You can offer to act as a business reference or to promote their services. The inverse works too—you can threaten bad reviews and cancellations of other clients if your ETF waiver isn’t met. If you’ve got specific clients on board or specific plans (a big twitter following, for example), you might have more power. Especially for smaller telecoms, their local reputation is everything.
6. Can you make it not worth their time?
Everyone knows that time is money. The key here is escalation, escalation, escalation. If you owe $1,000, your telecom can pay $10 an hour to some customer service peon for a hundred hours before it’s not worth their time. But if you’re working with your dedicated account manager, their time is worth a little more. If you’re working with the account manager’s boss, even more. Find someone for whom dealing with cancellations is way below their pay grade and they’ll be more likely to wave their hand and make your early termination fee go away. For low level staff, they’re more likely to be directly judged on how little they let you get away with and they’re unlikely to be able to push anything through without approval from upstairs anyway.
7. How creative can you get?
Every situation is different and there’s no one secret to getting leverage in an early termination fee negotiation. Try different angles and speak to different people. Offer everything you have to offer, threaten everything you have to threaten. You don’t have a crystal ball into how they’re making their decisions, but you might just hit on the magic word.
This is a Negotiation
Getting a telecom to waive a business early termination fee is the same as any negotiation. The same rules apply. Just because some telecoms are behemoths doesn’t mean you’re not dealing with human beings. At the end of the day, getting that fee waived is going to be a psychological feat. Practice up on your negotiating tactics. There are entire books on this, but here’s a quick primer:
Be direct. Establish rapport with your counterpart in the negotiation—learn their name, be friendly, but don’t let them change your mind. You know what you want—to pay $0 for that ETF. Start there. If you anchor the discussions at 0%, then them getting you to pay 25% looks like a win. If you treat the discussions like you’re starting at 100% and anything else would be a favor, then you’ll get nowhere fast. Believe you’re going to get that cancellation fee waived and act as such.
Negotiating is at the heart of waiving an ETF—how can you convince them to give you what you want?
Go in prepared. You’re going to be working with somebody who deals with dozens of clients or issues a day and they’re going to learn the details of your case when you present them. You get to control that narrative. Explain your case, prove you’re reasonable, make them understand your perspective, and you’ll get your negotiating partner on your side. Negotiating can be adversarial, but again, you’re not fighting the company itself—you’re trying to help one of its employees find an excuse to break protocol and help you out. If you’re sympathetic, they’ll likely want to help. If you’ve done your homework, you know your leverage points. You know what you have to offer, what you have to threaten—you know the ins and outs of the contract language and you can catch them in any errors or lies.
Get it in writing. This is all important. They’re probably recording the phone call, but you’re probably not. If somebody makes you a great promise on the phone and then says they couldn’t get approval from corporate when the time comes to finalize, you’re no better off. Get them to email the details of any offer you want to accept; if they don’t, you email them with a summary of the call and ask them to correct any errors. If they do make you a great offer, seize on it. Even if they say they can’t follow through later, you’ve got a foot in the door. When you’re talking to their boss and have proof that the offer was made, you have every right to accept nothing less.
Take your time. This goes back to point 6 above. The person on the other side of the table—or the phone—doesn’t want to be dealing with this. They’ll offer you partial discounts or alternatives as a way to get themselves out of the conversation. If they don’t, just speak to somebody else. Even if they do, speak to somebody else. Unless their first offer is to waive the early termination fee entirely, you don’t want to accept their first offer. Have them note it and move it up the foodchain. You’ve got time. If you can get $1,000 knocked off your commitment today, call back tomorrow and get the next thousand. If you don’t have time to do this, you’re going to miss out on serious money.
Bring out the Big Guns
If you’re not a practiced negotiator, you hate confrontation, or you just don’t have the time, that’s okay. That doesn’t mean you have to give up and it certainly doesn’t mean you’re going to have to pay that ETF. Telecoms have made waiving their early termination fees as hard as possible and for business contracts, it can be an impossibly complex step even to get started. Maybe you don’t want to start in the first place or maybe you’ve tried and failed. It might be time to have a professional step in.
BillFixers specializes in negotiating telecom deals, from single households to massive business contracts. Negotiators pick up your case, do all the dirty work—the research, the negotiating, the deal—and come to you when things are finalized. Experts who know the ins and outs of companies, their departments, their flexibility, and their pricing have an upper hand. And no matter how much you fancy yourself a negotiator, for the BillFixers team, it’s a full time job.
Hiring a professional telecom negotiator like BillFixers to waive your early termination fee is the best option.
The advantage to this approach is that there’s no charge unless they reduce or waive the early termination fee. So, if you were even considering paying that ETF, have someone do it for you. If they fail, you’re right where you started, but if they succeed, you walk away with money you didn’t even expect to have. And with a 95% success rate, you’re virtually guaranteed to get your ETF waived or reduced.
An example of a recent case: a company with multiple branch offices was closing three and consolidating them to a new location. However, they had just signed brand new contracts on the old branch offices and owed around $100,000 in early termination fees under their contract. The telecom was insisting on the ETF in full. After several weeks of negotiating that led nowhere, they contracted BillFixers to work on the account. By leveraging a (significantly reduced) contract for the new location, negotiators got the early termination fee waived entirely on the old locations. Now, instead of owing $100,000 and still being without service, they have a less than $10,000 obligation and service at their new location.
But, you don’t have to be a big company to have a professional help out. If you’re working on waiving the early termination fee for your home office internet, bringing in help can still save you money. And, if you’re a large company with significant telecom bills, getting someone to help waive your early termination fee can make huge difference on your bottom line.
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