Consumer Protection

Nextel Wireless Billing Practices

Result: Settlement valued at $55 million
Year: 2006

Strugano v. Nextel Communications, Inc.

On May 10, 2006, the Los Angeles Superior Court granted final approval to a class action settlement on behalf of all California customers of Nextel from January 1, 1999 through December 31, 2002, for compensation for the harm caused by Nextel’s alleged unilateral (1) addition of a $1.15 monthly service fee and/or (2) change from second-by-second billing to minute-by-minute billing, which caused "overage" charges (i.e., for exceeding their allotted cellular plan minutes).

The Benefits to Class Members

The settlement provided the following benefit options for the over 300,000 Class members, who hold approximately 1.1 million cell phone accounts:

(a) Current Nextel customers have the choice of receiving either (i) an unrestricted calling card with 90 domestic call time minutes (valued at $13.50 per card) (usable for international or domestic calls) or (ii) 120 additional "anytime" minutes on their bill, allocated to three consecutive billing cycles in three equal increments of 40 minutes extra per month (with a value per Qualified Unit of approximately $12 (in terms of the value of additional minutes) or $48 (in terms of the value of overage charges avoided));

(b) Current Nextel customers with Unlimited Anytime Minutes have the choice of receiving either: (i) the same choice available in (a)(i), above, or (ii) the same choice available in (a)(ii), or (iii) credits totaling $10 on their Nextel phone bills, allocated as $5 (first month) and $5 (second month);

(c) Former Nextel customers who are not more than $25 delinquent can have the choice of receiving either (i) the same choice available in (a)(i), above, or (ii) if they choose to open a new Nextel account (subject to qualifying under Nextel’s normal terms and conditions), the same choice available in (a)(ii), above; and

(d) Former Nextel customers who are more than $25 delinquent will receive a $10 credit/debt reduction on their outstanding Nextel bill.