Verizon Wireless To Terminate Worst Aspect Of Early Termination Fees

from the about-time dept

Wed, Jun 28th 2006 6:59pm — Mike Masnick

Mobile operators subsidize the price of mobile phones, so it's no wonder they want to make sure their customers stick around for a while to make up the lost money (and some profit) on subscription fees. However, over time they've extended the length of the contracts from one year to two, and increased the "early termination fees" to ridiculous levels. Those ETFs can be hundreds of dollars and they're impossible to get out of. Even dying won't get you out of the fees sometimes. While it may keep subscribers through the end of their two year contract, it also pisses off enough people that it simply delays the time frame until they switch to a competitor. It appears that Verizon Wireless has finally realized that people aren't thrilled about this. They're still keeping the early termination fee, but prorating it, so that the closer you are to the end of your contract, the cheaper it is to leave. That seems a lot more fair. The company also has decided that existing customers can get the same deals on new phones that new customers can -- which is something that never made sense. Churn is incredibly costly for the mobile operators. Keeping existing customers happy should be a priority -- yet, plans that gave better deals to new customers than existing ones simply served to piss off long standing customers (not that they could leave due to the high ETFs, of course). So, perhaps, lowering the ETF penalty, while also giving customers more reasons to stay, it will help reduce churn even more.

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44 Comments

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Susie Horejsi, 28 Jun 2006 @ 6:58pm

ternimation fee
How can I find out if I will get a termination fee and how much it is if I decide to terminate. I do not want to change plans and pay more but I do not use the phone that much and I have to pay roaming every time I use it. Thanks, Susie
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Ralph Fulton, 28 Jun 2006 @ 6:58pm

Praises
Hallelujah! They finally got it right!! after 3 years of arguing with them about this, they eased one over the plate. I told every rep that I talked to that they should turn in a suggestion form telling the bosses that they were contributing to the slow growth of the phone industry and sale by not allowing a techie or a yuppie to purchase a new phone as soon as they hit the market to compete with other techies to have bragging rights of having the newest and best on the market, but you think they listened? they had to experience the bleeding of customers leaving for better service before they woke up. I ported over 6 phone lines from AT&T in 2003 because of similiar issues, I just bought the Verizon Q and got the discount without the hassles that I got just 6 months ago about wanting to upgrade my phone without switching carriers. Apparently, the prevailing thought was, if they let you buy a new phone, that meant the contract would be voided, so rather than deal with all the legal mumbo jumbo, they just said no to all of the above. I hope they will listen to my other suggestion to give a slight Thanks for being a long time Verizon Customer one time discount per year for multiple line customers, or a discount card, inviting them to come on in and upgrade to a new phone anytime they want. after all, the WHOLE reason for selling new phone is to sell MORE new phones!!. give customers who have not been late with a payment within a 12 month period a cupon to the local fast food chain, this way, you are networking with other businesses and getting them to promote YOUR phones! and vise-versa. I should be in their advertising and marketing department getting paid for GIVING away all this free advise. I wonder if they will give me any props for being the originator of inovative ideas as a customer when they start making money? probably not.... That's all folks!
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Starky, 28 Jun 2006 @ 7:40pm

Yay for companies finally realizing that their old stratagy for buisness sucked, and that making it suck more is a bad idea!
It's nice to see some sensible ideas for a change.
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Jacob, 28 Jun 2006 @ 8:33pm

YAY!!!
Having worked for VZW in the past (customer service). This is a BIG step in the right direction! ETFs make sense to me to recoup the cost of phones and make some profit on top of it (that's what they're there for, to make profit) But as a CS rep I never understood why ETFs were not prorated. This is perfect!!!
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- Rod, 29 Jun 2006 @ 6:14am
  
  Re: YAY!!!
  I agree with Jacob...I worked for VZW out of their Orangeburg office for a few years...and I also never understood why something as rational as a prorated ETF was never instituted...we would prorate monthly charges for a price plan switch (which would cost unsuspecting customers hundreds of dollars) but never the ETF...it's about time...
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Trey, 28 Jun 2006 @ 8:34pm

The People matter
Finally, i dont see why other companys do this.
Verizon is really revolutionizing everything.
Whether bad or good =p
Even though i dont have them as my provider, Too expensive for me, I still give them credit.
I have Cingular, i have only dropped.. i dont know 5 calls in my 3 1/2 years having the service.
3 of those are due to Hurricane Katrina.
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Nack, 28 Jun 2006 @ 8:42pm

As a previous Radio Shack employee for over 3 years and selling Verizon phones it was very difficult to explain any kind of reasoning for an existing customer not to get the same benefits and new customers. Boy did Radio Shack loose a large customer base coming in to buy phones (Probably why one reason RS no longer sells Verizon). My only logical reply to a pissed off customer I could jender up was "Hey I've got Verizon too and I can't even get a new phone when MY contract is up, but I'd love to sell you this piece of crap refurbished phone at a discount".
Nice change, to bad they didn't see a year ago or I would of made a killing on commissions. They sell good products, just to greedy and lost a good company to sell phones through.
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whitey, 28 Jun 2006 @ 9:00pm

I got out of my ETF with cingular
I had two cingular phones, one that I had started with and one that was added to the plan after a bit after. I went into a cingular store to ask when my contract was up and they told me that I was "out of contract." Signed up for verizon, then got a $250 bill from cingular. The second phone was still incontract. I told them over the phone. "I will never pay you, dink my credit, I don't care, you wont get this money from me, ever" they dropped the charges.
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John, 28 Jun 2006 @ 9:40pm

Unfortunatly this probably isn't due to verizon "seeing the light" as it is in large part to stop the outflow of loyal customers. I think the cellular companies started to think they were untouchable, good to see that somthing I do can make a difference. My advice, drop your cell provider when they start malking your like difficult - would you take that from a pizza shop? a deli? or a auto repair garage?
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anon, 28 Jun 2006 @ 10:38pm

Comment by YAY!!! sounds like a VZ corporate troll.
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- Jacob, 29 Jun 2006 @ 3:14am
  
  Re: comment by anon at 1038pm
  ummm no, quite the opposite actually.
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Sean, 28 Jun 2006 @ 10:40pm

lol
WELCOME TO THE 21ST CENTURY VERIZON! YOU'VE LEARNED 'GOOD BUSINESS MODEL' :)
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Anonymous Coward, 28 Jun 2006 @ 10:43pm

John, you wouldn't take that from a pizza shop, deli, or auto repair garage because in most geographic markets there is something crazy called "competition." Since the United States has barely enforced antitrust laws since the 1980s, because of a flawed interpretation of the Law and Economics movement, Americans are left with no choice with regards to cell-phone companies.

Year after year, America lags behind Europe and Japan in cellphone functionality and capability. As cell-phones get further integrated into the internet, America is going to be at a huge disadvantage.

Don't worry though, the hyopethical free market rules.
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Anonymous Coward, 28 Jun 2006 @ 11:00pm

Another thing I think it would be neat for VZW to do as well... if a customer leaves early in their contract they have the option of paying the entire ETF or having it broken into payments for the remainder of their contract, each month getting a bill for that prorational amount of the early termination fee.....

as far as early upgrades vzw has their merits program and will now usually let 2yr customers on 79.99+ plans upgrade after a year. $50 is better. But currently vzw only does the early upgrades and they do not let independent retail agents (like radio shack) do them.

and same applies to new every 2.

maybe vzw can take care of those two problems for its indepent retail agents.
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raize221, 29 Jun 2006 @ 12:11am

What I want to know...
Does this new ETF strategy apply to current subscribers or just new people signing up? I wouldn't be that surprised if I was stuck paying tons of money if I leave them because I signed up before the "prorated ETF plan was enacted..."
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- Gabriel Tane (profile), 29 Jun 2006 @ 6:50am
  
  Re: What I want to know...
  raize221,
  
  As per the article, the prorated ETF is for new contracts and for any current contract-holders that resign for another 2yr contract.
  
  That doesn't suprise me. I don't mean this cynically or bitterly, but cell providers will use any opportunity to roll a client into another contract. I added my girlfriend and her new phone to my account. Since my VZ contract was a plan-level they no longer offered, I had to "upgrade" my plan to the new one and that was locked in for a new two years.
  
  meh. I don't have problems with the service... except some of the billing practices (like charging your minutes to check your vm from your own phone. wtf?!?). I can make calls in my area (and plenty of other areas) and it's not unaffordable, so, again, Meh.
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Ho Hang low, 29 Jun 2006 @ 12:15am

true
My pops died and the "nextel' a spring company charged us 450 because we ported the numbers elsewhere
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Sohrab, 29 Jun 2006 @ 1:03am

this is good news. Mostly for those wh o love gadgets, including new phones but dont want to dish out $400-$600 a year for a knew phone
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saleh, 29 Jun 2006 @ 6:52am

Personal anecdote
I recently terminated service with VZW (being out of the US for a few months), and was actually pretty surprised when customer service didn't refer me to the retention department thugs. When I get back, I'll probably actually re-sign with Verizon, in part because they have a decent tethered data plan, and in part because they actually treated me decently when leaving.
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todd, 29 Jun 2006 @ 6:57am

Verizon trying to catch up with Cingular?
This article talks about mobile operators, how about rephrasing that to just say Verizon Wireless. Cingular (and formerly AT&T) as well as SprintPCS have had proated ETFs for years. I know cingular also give upgrades to existing customers after 21 months (i know its less than 2 years).

Really what the companies need to do is to reward loyalty by giving a 10% discount to customers that continue with service past the end of their contract.
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Anonymous Coward, 29 Jun 2006 @ 7:39am

Mobile operators subsidize the price of mobile phones, so it's no wonder they want to make sure their customers stick around for a while to make up the lost money...
Most of them I checked out require long contracts and charge early termination fees even if you bring your own phone, so that excuse is a little weak.
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Lisa, 29 Jun 2006 @ 9:07am

T Mobile
I wish T Mobile had decided to do this about a year ago when I was trying to switch to Verizon. Shame on me for using T Mobile
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zamo, 29 Jun 2006 @ 11:30am

Cingular used to prorate ETFs
I had an old contract with 1 remaining month (2 lines). I decided to switch to T-Mobile taking advantage of free phones and just 1-year contract. I paid $10 per month remaining per line ($20 in total).

But yeah, that should be with all carriers. Why charge a full $200 ETF if there is just a couple of months remaining?"
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NoBadDays, 29 Jun 2006 @ 3:49pm

Love VZW!
I had sprint about 5 years ago, I would need to create a new article just for all the problems I had with them. My point is I'm not surprised that VZW is the first to do this. I know I probably pay more than I should for my service, but it is outstanding and worth it. Hopefully other providers will follow. I never have a problem re-signing with them because I don't plan on cancelling my service, but the idea of getting a new phone with the same deal as new clients REALLY appeals to me.

P.S. I swear I am not a "corporate troll", just a REALLY satisfied VZW customer.
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julie mastbrook, 29 Jun 2006 @ 4:57pm

Anyone know when this actually goes into effect? I just cancelled today and the woman had no clue about prorated. is it just on new accounts and not exsiting?
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Steve, 29 Jun 2006 @ 6:21pm

I had 2 phone with VZW
back when they were Ameritech in the Chicagoland area.

They tried to charge me $400 to break 2 contracts when I moved out of the service area.

I asked them to produce a signed copy of the the contract, and they couldn't, since the retail location I bought the phones at went out of business.

It took 18 months, but they finally dropped the charges when I suggested we go to small claims court.
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Marsh, 14 Jul 2006 @ 5:14pm

T-Mobile lack of service
I have T-Mobile service (service?) and they said if I wanted to break my contract they would turn me in for collection if I did not pay. Guess what I think of T-Mobile at this point? In a family emergency a week ago my son broke his leg. My t-mobile phone and my son's t-mobile phone would not dial 911. Know the feeling of having your son laying on the pavement with bones sticking through his skin and not being able to call anyone? This contract stinks. I have been trying to resolve the no service problem with them for months. They have never tried to do anything for me. Now they want to stick it to me.
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- Jon Ross, 8 Aug 2006 @ 5:28pm
  
  Re: T-Mobile lack of service
  I also had to leave T-Mobile for lack of service. They are trying to get $400 termination fee from me. I contend that their coverage map on their web page shows 2-3 bars (fair Service) at my home yet service is erratic at best. In talking to customer service, they directed me to move my mouse over they key at which tim, a popup window appeared saying the service was only good outside or in a car. Since there is no place on their web page that give the mouseover instructions, I plan to persue a 'false and misleading' advertising complaint against them. I contend that had I known what their key meant, I would never have gone to thenm in the first place!
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Janice, 14 Jul 2006 @ 11:55pm

Looking for facts...
Yes, it would be great to know when this goes into effect as we have been loyal Verizon customers, despite not a single customer service representative being able to give us the same story since we signed onto Verizon. Since signing on with Verizon, we have felt treated like prisoners to their services: from voicemail to the recent upgrade we attempted to get on our phones. After being told over the phone by a service rep, basically the same thing we heard above, we wasted our time to walk into a Verizon store thinking we would happily upgrade our phones. No. In fact, we were told the opposite and that we would have to pay full retail for the phones we wanted and be charged additional money for ending our current 2-year contract. How can this be? We're not ending it. We're just simply changing it! It would be good to know the facts as we are pretty much fed up with Verizon and are considering to switch back to Sprint, which always treated us with the utmost respect and bent over backwards to provide us with service. The only downfall was moving to an area where Sprint did not have a cell phone tower, which was the reason for our switch to Verizon.
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Bryan, 4 Aug 2006 @ 10:08am

Verizon is making me pay the ETF...
I had my Verizon phone for roughly seven years, always paid my bill on time, and signed up for several two-year contracts. Last February I moved to an area that had poor or no service. I put up with dropped calls for four months. I called customer service a couple times a month, talked to their technical support, opened research tickets (which they conveniently can't find...) and they were never able to "fix" my problem. Of course they couldn't fix my problem because I moved to an area that had poor service! Anyways, after four months of dropped calls, "mysterious" voicemails that would show up without missed calls, floods of text messages that would poor in by the dozen with people saying, "How come you haven't answered me yet?", "Are you there?", "Heeeelllloooooo???", "OMGWTFBBQ!", getting a bit side-tracked here... So, after four months of that crap, I ported my phone over to T-Mobile. Now Verizon wants me to pay the ETF. Supposedly, it states in the Customer Agreement, that moving to a location that has poor or no service is a valid reason to terminate early. HOWEVER, Verizon needs to "prove" that I had poor or no service and the only way to do that is to have a tech come out and survey the exact location. Of course they can't look at the number of dropped calls I had in a month, let alone in a day. So like whitey said above: "I will never pay you, dink my credit, I don't care, you wont get this money from me, ever"
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Laurie Allen, 6 Sep 2006 @ 1:53pm

Nextel
My service, oops, lack of servcie is with Nextel. My current plan isn't up until January 2007. I just signed up with another cell company.

I have a personal nextel and a work nextel. Neither work at my house, yet the coverage area shows it should work fine.

I have my original contract that shows I'm signed up for $5 a month mobile to mobile coverage. I received a $324 bill from my husband calling me, cell to cell. I called Nextel and was directed to the store where I purchased the plan. The store manager said sorry, can't help you and walked away. The next month the bill was $300, same story. I was very upset. Again, I called Nextel. This time the person made sure the cell to cell was activated on my phone, yet did not refund one dime!

I have other Nextel horror stories from my years with them, I won't bore anyone further. NEVER go with Nextel!
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Werze, 12 Sep 2006 @ 6:45pm

Still not in effect!!
It hasn't gone into effect yet, I just canceled my service and paid the full ETF.
I think this article is BS!!
Anyone got a link to the Verizon press release about this?
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LDaniel, 4 Oct 2006 @ 3:14pm

great!,
Now if they would stop crippling the hell out of their phones to force you to GIN.

In 7 weeks my VZW is up, I am considering getting a new cellular service.
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Heather, 5 Jul 2007 @ 6:23am

Verizon DOES NOT prorate termination
We have been with Verizon for the last 6 years, continuing to renue our contract for two years each time. We recently have dealt with two different reasons to terminate service. The first was when my husband took a job about an hour and a half away and the comany he works required him to have a phone on the same netwok as them (NEXTEL). Our contract still had 7 months remaining. We have 3 phones on our Verizon plan, whhich accounts for approximately $100/month in service to them. They absolutely refused to even pro-rate the termination fees, stating the we would have all three phone fees to the tune of $525 in early termination fees. We waited. Over the last couple of months, our service in our area has started become very troublesome, and I have lost calls all of the time. Whether I'm at work (20 miles from home) or at home, it doesn't matter. You would think that with this problem and the fact that we only have 6 weeks left on our contract, that they would ablige and let us out, holding up their end of so-called- top notched customer service. NO. They were willing to issue a credit for $50 and put me over to technical support so that if the phone itself had issues, then we could get the phone replaced. So, here we sit, with 3 phones on our plan, only one of with actually gets used, they won't lower the plan at all, wnd they are even saying that when our billing cycle ends on Sugust 12, we will have a final bill for the 6 remaining days left on the contract. they won't even let it go 6 days early!. I will never return to Verizon, even if it means paying a higher price.
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Jeff, 10 Jul 2007 @ 5:38pm

Verizon Proration
This does not exist, as of July the 10th, 2007. I just broke my contract, and have a charge of 175.90 on my account. A certain set of circumstances exist that allow me to believe this can be removed, but the bottom line is that nothing was prorated.

Jeff
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PixyGirl, 23 Jul 2007 @ 8:51pm

I read in the news that this pro-rated EFTF only goes into effect if you are a new customer as of 11/16/06. Us oldies are just out of luck. Of course if you sign up for a "new" two year contract, you will be on the new plan.....
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john, 13 Sep 2007 @ 8:49pm

These people are highway robbers, nice and simple.
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Ross, 9 Feb 2008 @ 12:34pm

You'll get a early termination fee no matter what.
I was off my contract, and switched to AT&T, but I still got the fee! Turns out that they treat *any* termination initially as an early termination, and charge you the full $175 per line (so $350 for me, between my wife and I), and only after the next month, do you CREDIT YOU BACK THE MONEY THEY TOOK. In my case that's exactly what it was since I had auto-bill pay turned on and it was going against my checking account (debit card). They claim that's "just how their system works" and it's not a problem at all. Whatever. All I know is that they're hanging onto my $350 for a whole month without cause or my consent.

Read my rant here: http://www.jackassery.com/news/504/
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Steve, 14 Feb 2008 @ 11:57am

Early Temination Fee for Contracts signed prior to
If you signed up with Verizon before November 16, 2006, you still get the full $175 fee no matter how long you are on the contract. My wife and I signed up in March of 2006 and cancelled in February, 2008, mistakenly thinking our contracts were up (because Verizon was already offering us the free upgrade, which they say is the "free every two" upgrade). They charged us $350. We were through 23 of the 24 months of our contract and got nothing prorated.

This is an FYI for everyone who signed up before November 16, 2006.
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- Dave, 28 Feb 2008 @ 9:50am
  
  Re: Early Temination Fee for Contracts signed prio
  @ Steve
  
  Were you able to work with Verizon at all to get the ETF prorated? I am running into the same situation right now and everyone I talk to at VZW has been stonewalling me.
  
  thanks
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- igor, 24 Aug 2008 @ 7:57pm
  
  Re: Early Temination Fee for Contracts signed prior to
  Hi, I'm in the same situation with Verizon as you were. I cancelled during 23rd month of contract and was charged $175 as the contract initiated on Aug 2006. Were you able to get your ETF reduced eventually?
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The Verizon Strangler, 18 Jun 2008 @ 12:55pm

The iPhone dominates Verizon, At&t soon to be on top.
I hate verizon..all the fees and crap of get it now for 2.50 each access. I'm getting iPhone 3G and will be the day in paradise when I walk into verizon not with my phone broken but to end the sick relationship!!!~!
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ProratedETF, 21 Oct 2008 @ 12:44pm

Filed with California Public Utility Commission (CPUC)
Only after filing with CPUC and FCC did Verizon offer the post-November 2006 proration. For right now, CPUC seemed to be the answer. California has had a big class action lawsuit against ETFs. I too was only 9 days away from my two year contract ending. I thought it had completed, but Verizon still billed the $175 per phone.
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robert castonguay, 4 Apr 2009 @ 3:25pm

verzion wireless etf
as a verzion custmor i was caugh up in this scam of verzion,s thea cost me my self pride and put a stain on my credit report wich i am still trying to resollev after 4 years i am going to start a class action suit aganist vrezion 2009 it is a same that they get away with things like this it has been 5 years going on now with no curei am readdy to start this law suit if instred get in touch with me bob
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