Cell provider to pay $500,000 for hitting U.S. troops with illegal fees

(The Center Square) – A cell phone service provider agreed to pay $500,000 to resolve allegations it illegally charged 1,300 U.S. troops in Guam who ended phone service contracts after getting military relocation orders.

The Justice Department announced Tuesday that Teleguam Holdings LLC, operating as GTA, must pay $500,000 to settle allegations that it violated the Servicemembers Civil Relief Act.

“Servicemembers will not be penalized because of their patriotic service to our country,” said Assistant Attorney General Harmeet Dhillon of the Justice Department’s Civil Rights Division. “We will vigorously prosecute companies that refuse to abide by federal law that protects our great men and women in uniform who actively serve to protect our Nation.”

GTA will provide $450,000 to service members, including double damages to those who paid the company’s early termination charges. The company will also pay a $50,000 civil penalty. Furthermore, GTA will change its policies to ensure that eligible military service members can end their cell phone service contracts without illegal early termination charges, according to the DOJ.

GTA denied wrongdoing in the agreement. The company does not concede that the “subsidy fees,” which it contends were charged to customers to recover the balance remaining on subsidized devices, violated the Servicemembers Civil Relief Act. GTA said that it created its subsidy fee policy specifically to comply with the SCRA.

“GTA’s position is that it did not have any policy that would have charged eligible servicemembers a termination fee for canceling a commercial mobile service contract in the circumstances described in the SCRA,” according to court records.

The company agreed to a settlement to avoid the cost of litigation, according to court records.

The charges at issue were “subsidy fees” or “balance recovery costs” for each month remaining on two-year contracts at the time of termination and the required repayment of contract incentives. Prosecutors alleged that GTA required military customers to pay a “subsidy fee” of $20 per month of the remaining contract when they terminated their contracts early. Prosecutors said the “subsidy fee” was an early termination charge. Prosecutors also alleged that GTA required some qualified terminating servicemembers, including those who submitted qualifying retirement or separation orders, to pay a $30 per month “balance recovery cost” for each month remaining on their contracts. Prosecutors said that constituted an unlawful early termination charge.

GTA didn’t immediately respond to a request for comment from The Center Square on the agreement with prosecutors.