Don’t tell me that you’re innocent. Because it insults my intelligence.
– The Godfather

The FCC has asked Verizon for more details about their increased Early Termination Fees (pdf), reports PC Magazine. Verizon increased their ETF from $175 to $350 on some smartphones. A customer who cancels their two-year contract after 23 months still owes Verizon $120.

The FCC asked, “If the ETF is meant to recoup the wholesale cost of the phone over the life of the contract, why does a $120 ETF apply?”

The move comes after Sen. Amy Klobuchar, a Minnesota Democrat, asked that the FCC examine the issue. On Thursday, Klobuchar also introduced a bill that would limit the amount a mobile provider could charge for ETFs and require that they pro-rate the fees. Klobuchar’s bill would prevent wireless carriers from charging an ETF that is higher than the cell phone discount. If, for example, you received a $150 phone for free on a 2 year contract, then the termination fee cannot be more than $150.

The FCC wants carriers like Verizon to pro-rate their ETFs, provide more clear and conspicuous information about ETFs, and put the current ETF balance on monthly bills. Verizon currently pro-rates the $350 ETF by only $10 a month, which would require 35 months on a contract.

The FCC also requested more data about $1.99 data charges, which were referenced in a recent New York Times article.

“The phone is designed in such a way that you can almost never avoid getting $1.99 charge on the bill. Around the OK button on a typical flip phone are the up, down, left, right arrows. If you open the flip and accidentally press the up arrow key, you see that the phone starts to connect to the web. So you hit END right away. Well, too late. You will be charged $1.99 for that 0.02 kilobytes of data. NOT COOL. I’ve had phones for years, and I sometimes do that mistake to this day, as I’m sure you have. Legal, yes; ethical, NO.

“Every month, the 87 million customers will accidentally hit that key a few times a month! That’s over $300 million per month in data revenue off a simple mistake!

“Our marketing, billing, and technical departments are all aware of this. But they have failed to do anything about it—and why? Because if you get 87 million customers to pay $1.99, why stop this revenue?

Verizon must respond by Dec. 17.

The CTIA says the Klobuchar bill is pointless:

“This legislation is unnecessary simply because wireless carriers already pro-rate ETFs,” CTIA president and CEO Steve Largent said in a statement. “That was the response of a highly competitive industry to consumer demand, and this type of prescriptive mandate runs the very real risk of limiting consumer options in the future.”

Verizon has allowed pro-rated ETFs since 2006, Sprint and T-Mobile followed suit in late 2007, and AT&T implemented the same policy in 2008. Discounting the ETF balance monthly was only provided after the threat of legislation. Consumer complaints about Early Termination Fees prompted the the Cell Phone Empowerment Act of 2007.