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Class actions

January 27th, 2010 (09:23 am)

I hate getting notifications that I'm eligible for some class action payout that I don't agree with. It doesn't happen often, but yesterday I got two.

One was a suit against AT&T, for having flat-rate early termination fees. (They switched to prorated, but the suit is about what they did before that.) I gather the theory was that an ETF is reasonable only because the carrier is trying to recoup some of the money they spent on subsidizing your phone; if you cancel after 23 months, they've gotten their money back, and keeping a full-sized ETF is just an anticompetitive tactic.

I think this one is bogus. It was a reasonable contract—the subsidy on most cellphones is more than the ETF, and, when you leave, you walk away still owning the cellphone. AT&T tried to make that worthless, by locking down their phones so you couldn't use them elsewhere; but it was often possible to get them unlocked. (This is harder with current smartphones, but was much easier during most of the 10 years the lawsuit covers.)

The other one was even worse: a suit against 1-800-Flowers for charging a shipping fee on flowers delivered by a local florist—the claim is that the delivery fee was built into the price of the merchandise, so charging shipping was misleading. This is just garbage. When I ordered from them, I knew that I was paying extra for convenience; that's why the price of the flowers was higher than if I'd walked into a store. Then I paid for delivery.

I'm not going to claim either of these. For the 1-800-Flowers settlement, it's an easy decision: it's a $10 coupon, and $10 off is not going to be enough to be cheaper than dealing with a florist directly. For AT&T, I thought about it briefly, because there's a twist: AT&T's payout is fixed at $18M, to be split among the claimants (after the attorneys take their share, up to $6M); so they won't actually take any more damage if I claim. But it's just wrong.

Comments

Posted by: goldsquare (goldsquare)
Posted at: January 27th, 2010 03:22 pm (UTC)

Judges usually understand that an informed consumer makes a choice, and they don't find for the plaintiff.

They find for the plaintiff in cases of fraud.

From what you describe, these are cases of fraud.

Posted by: Who, me? (metageek)
Posted at: January 27th, 2010 03:28 pm (UTC)

Clarification: the judge hasn't ruled in either of these cases.

Posted by: goldsquare (goldsquare)
Posted at: January 27th, 2010 03:55 pm (UTC)

So these are settlements? In which case the companies felt there was sufficient danger of being convicted of fraud, that they decided to spend this money instead. Or so I suspect.

Posted by: goldsquare (goldsquare)
Posted at: January 27th, 2010 04:01 pm (UTC)

PS FCC is investigating ETFs in general for fraud or consumer harm.

Posted by: Who, me? (metageek)
Posted at: January 27th, 2010 04:10 pm (UTC)

Yeah, I know. It seems like grandstanding to me. If you don't want an ETF in your contract, you have options. You can get a prepaid phone, or you can buy your phone up front. (Now, the T-Mobile ETF that applies to the Nexus One, even if you didn't buy it on contract, that's slimy.)

Now, granted, we'd all be better off if we had unsubsidized, unlocked phones, like in Europe; and it might be in the FCC's power to force the carriers to go to that model. But penalizing them for using a subsidy-based model in the past is unjust.

Posted by: goldsquare (goldsquare)
Posted at: January 27th, 2010 04:58 pm (UTC)

But you can, no longer, buy phones up front via wireless companies, and many phones are only sold through wireless companies.

Using a subsidy-based model is not unjust, and not what they are investigating. Preventing consumer choice (which leads to higher prices) is exactly what they are investigating.

Posted by: Who, me? (metageek)
Posted at: January 27th, 2010 05:03 pm (UTC)

But you can, no longer, buy phones up front via wireless companies,

Counterexample: AT&T. From their FAQ:

Q. What is no-commitment pricing?
A.
When you want a new AT&T phone, but don’t want to commit to a long-term contract, no-commitment pricing is an option. Also referred to as “retail price,” this option does not require a two-year contract or other long-term service commitment. It’s simply the non-discounted equipment price, and is available to customers that are not on a prepaid or GoPhone® plan.

You can buy a phone at no-commitment prices at AT&T retail stores. For an AT&T retail store near you, visit our store locator.

Admittedly, they don't seem to offer no-commitment prices online. This is new (it wasn't the case when I looked 2-3 months ago)...and, yeah, it's unsettling.

Posted by: goldsquare (goldsquare)
Posted at: January 27th, 2010 05:08 pm (UTC)

It's a response to the FCC, I would wager. Don't pretend that the Internet represents history. :-)

Note: only available to existing customers, not new customers, says that FAQ.

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