If I move, do I still have to pay an early termination fee?

Is an early termination fee negotiable?

Marah Henning’s father has to move, and that’s a problem. Just a few months ago, he ordered new Internet service. Now he’s stuck with a $300 early termination fee he must pay.

Or must he?

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Is an early termination fee negotiable?

Henning’s question is so common that it’s prompted me to take a closer look at early termination fees (ETFs). It suggests that while most ETFs are non-negotiable — including Henning’s father’s — they are likely significant revenue generators and, indeed, have to be considered junk fees in most cases.

Let’s have a closer look at Henning, whose father had just signed up for a plan through Excel.Net, a Wisconsin service provider.

“At the time he was renting a house that he lived in for over twenty years with no plan to move,” she explains. “Shortly after that, the landlord told him that they were selling the house.”

Henning’s father moved and tried to relocate his Excel.Net service with him.

“He was told that it wouldn’t work in the new house, but he still had to pay a $300 early termination fee,” she says. “I understand that he signed a contract that the company requires for service, but the service is not available. How can they hold the customer liable?”

What does the contract say?

A look at Excel.Net’s operating agreement suggests that there is an early termination fee, but at the time I wrote this story, the company didn’t disclose the amount. As I read it, Henning’s father would have received a separate sheet with the fees spelled out. And in signing up for the service, he would have agreed to pay the fees.

Early termination fees have been around for decades. An ETF is typically imposed by a company when a customer breaks the terms of an agreement or long-term contract. Companies slip them into their contracts as an incentive for you to stay for the term of the agreement. But in some cases, the fees more than cover the amount of money you would have to pay if you remained. In other words, it’s cheaper to stay under contract than to leave.

Wireless carriers popularized ETFs, but they have since spread to other industries, like Henning’s father’s ISP. Companies are fairly strict about ETFs since they’ve become more than a disincentive to leave a contract — indeed, they’re a significant source of revenue from customers who have second thoughts.

The purpose of an early termination fee

No question about it, ETFs are a way to monetize customers who leave early. Even if customers have no choice about leaving, like Henning’s father.

In some instances, a reasonable ETF is almost justifiable. For example, let’s say a cable company installs service and after a few weeks, you decide you don’t want cable. Shouldn’t it be able to recoup the cost of the modem, installing the modem and wiring and any related technician time?

Sure, but some of these fees go way beyond that. They’re an attempt to enrich the company at the expense of a customer, even when the customer wants to continue the relationship.

Absurd and unfair

Unfair? Yes. Read Excel.Net’s agreement, and you’ll see that like many other companies, it reserves the right to terminate its agreement with you for any time and for any reason.

And what does it owe you? Nothing. Not even an explanation.

Now I’m sure there are some of you who will say ETFs are a fact of life, and that a close reading of the contract could offer you a way out on a technicality. Come on. Adhesion contracts like this ought to be illegal. Excessive early termination fees are wrong, wrong, wrong.

Unfortunately, I have no choice but to advise Henning to pay the $300. But I wish I didn’t have to.

31 thoughts on “If I move, do I still have to pay an early termination fee?

  1. That’s a shame. In New Jersey if it is a public utility, such as Comcast, if you want the service at the new address and they will not provide the service you must pay the fee. But after you return the equipment the NJ Board of Public Utilties requires them to refund the termination fee within 30 days. And according to three friends they always refunded it well within the 30 days.

      1. I don’t know, but the case we have before us here is concerning Wisconsin.
        But, perhaps you could research New York’s consumer protection laws and let us know what you find?

  2. Another one-way “contract.” You are penalized for breaking it, while the company can break it whenever it wants.

    Let’s see someone actually try to defend this arrangement.

    1. The ETF is probably there because the person received something of value from the company and they want to make sure they recover the costs. With Internet, the probably received free installation, a discounted monthly rate, and a cable modem. Without the ETF, if people dropped the service a couple months after getting those free services, that is a loss of money for the company. If there is an ETF with no exchange of something of value, then it is wrong.

      1. True, but when you move, or HAVE to move, and they are unable to continue to provide you service, then one would think the company is unable to fulfill their part of the deal too. It’s a two way street, or at least, it should be.

        1. Because he had to move, the landlord should reimburse all moving costs, including all fees incurred to disconnect services. The company is still able to provide service to the location where the contract was agreed to.

          1. Yes, but as *he* signed the contract, it cannot provide services to *him* because he doesn’t live there anymore. They did not sign a contract with the house, they signed it with the man.

          2. The contract is based on location where the person lives. Below is the FAQ about moving from the website.

            You will need to inform us if you are moving from your location. We will need to schedule a time to disconnect the service from the current location. If you are staying in our area we need to also schedule a time to connect the service at your new location. There will be a new installation fee to hookup service at the new location. If you disconnect service prior to the initial term you will be charged an early termination fee as stated in the operating agreement. However, this fee is waived if the service is disconnected at the old location and successfully installed at the new location.

  3. Considering reason he had to move, I would think that is something that could have been negotiated with the landlord to reimburse the ETF.

    1. That would be nice of the landlord, but if it was not in the lease contract, the landlord would not have to negotiate that. It would definitely be worth a try through, since the landlord wanted him out.

  4. This is outrageous. I’d refuse to pay. He should call his state representative and his congressperson. This must violate some sort of utilities regulation.

  5. How is it unfair? The provider offered a contract. They have to put service in place, provision equipment, etc. There is a sales cost. These costs are amortized over a number of years and so they amortize them, protecting themselves with an early termination fee. Because Joe Blow sells a house and mister tenant has to move…maybe that is “unfair” to the provider..

    1. For an ETF to be fair, the service arrangement must be maintained at the subscriber’s new address. If the move happens to be out of the service area or to one of those ‘dead spot’ addresses that are within the service area but for some local reason cannot be connected, the ETF should no longer apply. In such a case, the contract is broken.

      1. And the move out of the service area was instigated by? If I am a company and I spend $200 on equipment for you, I should lose that money if you move? There seems to be a double edged sword here. When you move, there are costs related to that move. Disconnections, packing, moving, reconnection fees. This happens hundreds of thousands of times each year. If companies are going to have to “eat” these costs then it just puts costs up for us all.
        Whining about a legitimate fee, for a legitimate contract, where, for whatever reason, the customer has terminated is a no go for me. Charge the landlord the fee. They are the ones who sold the house. They are the ones who “caused” the problem.

        I am going to have to move mid next year and I am pretty sure I am going to have to pay an ETF for an alarm system. I signed the contract, I took the risk.

        1. I retain my customers by treating then well so they keep calling me in good times and bad, not by trapping them with weasely adhesion contracts that only go my way. That’s why one called this morning to set up an appointment.

          Merry Christmas!

        2. Where is this $200 of equipment that you’ll never get back? The equipment will be returned to you, that person will have no further use of it.

      2. Consider this: The provider agreed to supply the OP with cable service under a certain set conditions. A material element of those conditions was the specific location of the service. If the provider has to relocate the service (even assuming it can supply it at another location), there will be a cost of such relocation. Here, the OP moved to a location outside the provider’s ability to provide that service. Technically, the provider was still able to perform its initial agreement; it was the OP that changed a material condition of the agreement. It’s a little like saying to the provider “I don’t want your service any more. Move it to my next door neighbor’s place. My neighbor wants the service and will pick up my monthly payments.”

        I don’t have a problem allowing a provider of services to recover the costs of performing (initial visit, testing, running cable, setting up equipment, providing instruction, etc.). What I do have a problem with is having the provider continue to recover those costs by way of an ETF, when there may be no relationship between the ETF and those costs. An extreme example would be a case where a user has used a service for decades, and then terminated. Certainly, any initial set-up costs have been recovered, likely many times over. And then to charge an ETF? Not right.

        1. Actually, the OP didn’t change a material condition of the agreement. The situation isn’t much different than if the customer’s house had burned down and would take years to rebuild. The fact that the customer can no longer receive the service at that address is outside of his control.

  6. Assume he must have gotten a really good price break when he signed up—–otherwise why would he agree to a contract and not just go month to month. I have had hi-speed internet for 15 years and no contract ever…..just a monthly bill.

  7. Take them to court for breach of contract and failing to provide the service contracted for. Send them a certified letter demanding they comply with the service portion of their agreement. If and when they refuse, send them a notice of breach.

  8. Poster Alan Gore has it right, i.e. . . . . “For an ETF to be fair, the service arrangement must be maintained at the
    subscriber’s new address. If the move happens to be out of the service
    area or to one of those ‘dead spot’ addresses that are within the
    service area but for some local reason cannot be connected, the ETF
    should no longer apply. In such a case, the contract is broken.”

    Excel . net lose out big in the end because of debates such as this, and ultimately potential new subscribers will go elsewhere.

    It’s always the greedy couldn’t-care-less companies that bite the hand that feeds them. Well, in this age of social media they’re the ones getting bitten . . . . and I love it!

  9. Seems to me that an ETF should perhaps apply for the first X months of a service agreement in order to cover any measurable installation/startup costs to the provider. After that, no ETF, unless the provider has to pay you an EFT if it decides to terminate for any reason other than your breach of the contract. Yeah, that’s gonna fly….

  10. It is not clear what type of service Mr. Henning had with Excel. Looks like there are two options they offer. Nor is it clear where he is moving. (down the block, new town, different county, etc…)

    Excel.net offers wireless internet, akin to satellite. Except that you must be close enough to the tower to receive the signal. And have line of sight. Long ago, I used to have such a service (not with them) and it worked really well. Then they upgraded their equipment and I was “too close” to the transmission tower to receive a steady signal. (Behind the homes across the street.) Oh well.

    The other option is DSL. And there are limitations there as well. You might be too far away from the phone company’s relay station in order to receive a proper signal. Or the neighborhood is not wired to handle the signal. Or other, more technical reasons.

    Normally I don’t like ETF’s, But Excel has a right to recoup their costs in installing (and removing) their equipment. And Mr. Henning was not a customer for a long enough period to justify the goodwill. If he had been a long time customer, then the fees would have been a money grab and I would argue for their removal.

    It is not Mr. Henning’s fault that he had to move. Nor is it Excel’s, And Mr. Henning is moving to a location that is not serviceable by Excel. Also not Excel’s fault. But he is a new customer and Excel should not have to lose money here.

  11. A lot of wireless providers (all I’ve ever heard of, anyway) will not charge you an early termination fee if you can demonstrate to them that you have insufficient use of their service (by their standards) in your home area. I think this ought to be a requirement for any ETF that requires being in certain geographical areas to use the service.

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