T-Mobile USA has become the latest US mobile operator to move to settle a class action suit brought against it concerning so-called ‘Early Termination Fees’ (ETFs), the charges levied on consumers who break their mobile contracts early. According to a filing by the US District Court for the District of New Jersey, the operator has offered to make a payment of US$11.5 million to settle the suit, which alleges that it broke federal and state laws when charging the ETFs. The settlement, which is still to be approved by the court, will affect T-Mobile USA subscribers who were charged a flat-rate ETF between 23 July 1999 and 19 February 2009. Under the terms of the proposed settlement, customers who paid an ETF can receive up to US$125, while customers who were charged an ETF but did not pay and did not receive a full credit within 30 days, can receive up to US$25. Existing customers that had been charged an ETF will receive a ‘non-cash’ settlement in the form of free minutes and texts added to their monthly contract for a three-month period.

Last summer, rival operator Sprint was ordered to pay back US$73 million in customer refunds after losing a class action suit brought against it by customers objecting to its ETFs. Another US mobile operator – Verizon Wireless – had earlier in the year paid US$21 million to settle a similar class action suit early. Operators claim the fees are necessary in order to cover the costs of subsidising a handset, but consumer advocacy groups argue that it unfairly restricts consumers from switching services.