You’ve heard of double coupons, right. And that’s a good thing. But you probably never heard of double terminations fees. And that’s a bad thing.
Google just introduced its first cell phone, the Nexus One. They sell for a lot of money: $529 if you just want to buy the phone, but only $179 if you buy it as part of a package deal with two years of service from T-Mobile.
If you cancel early, you would expect to pay an early termination fee to T-Mobile:
*MOUSE PRINT:
So, you would owe $200 to T-Mobile if you cancel within the first year and a half of your contract. What you might not expect is to pay a second early termination fee, this time to Google.
*MOUSE PRINT:
If you cancel your service within the first 120 days, you will owe Google an “equipment recovery fee.” That’s the difference between what you paid for the phone ($179) and the full retail price ($529). In other words, $350.
So let’s do the math. You pay $179 for the phone upfront. If you cancel, you pay T-Mobile $200 and Google $350. That totals $729 for a phone that would have cost you at most only $529. Seems like someone is profiting from your early cancellation.
And to add insult to injury, should you want to avail yourself of Google’s 14 day trial period where no early termination fees apply, you will have to pay a restocking fee of $45.
What they are doing actually makes sense to me. If I were to pay $179 for the phone, then immediately cancel, I would have to pay the $200 early termination fee. That’s a total of $379. Without the equipment recovery fee, I would own that phone having only paid $379, instead of the $529 everyone else pays. I then turn around and sell it on eBay for $475 and I pocket the difference. How is that fair to Google?
I think the equipment recovery fee was put in place to ensure this type of thing doesn’t happen.
I agree completely with Yolanda. This isn’t set up to scam customers in any way, but to *prevent* scammers from buying it low-cost and turning around and selling it for a profit. Sure, a few people are going to get shafted if they genuinely need to cancel the contract for whatever reason, but they can sell the phone and recoup the phone’s cost while still eating the usual cancellation fee they would normally pay.