Consumer Sues Yahoo, AT&T Over Early Termination Fees

lady justiceIn June 2006, when Robert Seraphin moved from Placentia, Calif. to Garden City, Idaho, he still had two months left on his broadband contract with Yahoo and AT&T.

The companies, which were then marketing co-branded Web access, informed him that he couldn't transfer the $14.95-a-month subscription to his new home because they didn't offer broadband there. Then they charged him a $200 early termination fee.

Now, Seraphin has sued, arguing that the $200 fee violated California law because it "substantially exceeds the damages defendants may suffer, if any, when customers cancel defendants' service before the expiration of their service agreement."

Seraphin is seeking class-action status in the case, filed last week in federal district court in Idaho.

The lawsuit is just one of several pending cases to challenge providers' early termination fees. Many of the complaints have stemmed from fees for canceling wireless contracts, but at least one other lawsuit deals with the Yahoo/AT&T Internet service. That case, filed by California residents Stuart and Barbara Hutchison, is currently pending in the central district of California.

Cyberlaw expert Venkat Balasubramani says that in California, penalties for cancellations must be reasonably related to actual damages suffered by the providers. Last summer, a judge in California ruled that Sprint Nextel's early termination fees were unlawful. Separately, Verizon Wireless agreed to pay $21 million to settle a lawsuit about such fees.

AT&T and Yahoo no longer offer co-branded Web access. Both companies declined to comment on the lawsuit.

AT&T also no longer offers the $14.95-a-month access plan.

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