Sprint has agreed to pay $17.5 million to settle a class-action lawsuit claiming its early termination fees are illegal.
The Overland Park, Kan.-based carrier said the bulk of the settlement, $14 million in cash, will go into a common fund to pay claims, while an additional $3.5 million will go to non-cash benefits to class members.
The lawsuit, filed in federal court in New Jersey, claims Sprint overcharged early termination fees between July 1, 1999, and Dec. 31, 2008 -- amounting to $1.2 billion.
Customers who can prove they were charged an early termination fee during that period are eligible to receive $90. Those that didn't cancel their contract, for fear of the fee, are entitled to $35.
Sprint has denied that the fees are illegal. Regardless, the company said it will switch to a pro-rated fee structure, charging customers who are closer to the end of their contracts less in termination fees than subscribers who opt out earlier.
