The Federal Trade Commission said Tuesday it was suing AT&T for “deceptive and unfair data throttling.”
The complaint alleges the cellular company charged customers for unlimited data plans but slowed connections speeds to compensate, sometimes by 90%. The practice allegedly affected at least 3.5 million customers.
AT&T “misled millions of mobile customers by charging them for so-called unlimited data plans that weren’t unlimited at all,” FTC Commissioner Edith Ramirez told reporters Tuesday.
Under the current plan, if customers reach a certain amount of data use in a certain billing cycle, AT&T reduces, or throttles, their data speeds so much that common activities, like GPS or video-streaming, become “significantly slower or practically inoperable,” Ramirez said. The FTC also claims AT&T didn’t fully explain the practice to customers.
“Data throttling isn’t always illegal, but when it’s done in a way that’s deceptive or unfair, it most certainly is,” Lisa Weintraub Schifferle, attorney for the FTC, writes.
Currently, however, AT&T admits that certain customers with existing unlimited data plans who exceed 3 gigs of data in one billing period could experience reduced speeds.
In a statement, AT&T senior executive vice president and general counsel Wayne Watts called the FTC’s allegations “baseless.” AT&T notified all unlimited data plan customers via their bills and a national press release before the program started, Watts says. When customers experience any reduced speeds, they also receive a text message, he explains.
“We have been completely transparent with customers since the very beginning,” Watts says.
The FTC, however, doesn’t think AT&T adequately disclosed the extent of speed reduction — or the impact it would have, according to Ramirez.
“We stand by our allegations, and we aim to prove them in court,” she said.
This practice allegedly began as early as 2011. Since then, AT&T has throttled connection speeds for at least 3.5 million unique customers more than 25 million times, the FTC alleges. At times, reduction supposedly reached 80% to 90%. Some customers called the practice a “bait and switch,” while others noticed that “unlimited should mean unlimited,” Ramirez explained.
AT&T bailed on its unlimited data plan for smartphones in 2010, but some customers remain grandfathered in.
If true, AT&T’s actions could violate the the FTC Act by “changing the terms of customers’ unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans,” according to the complaint.
The FTC’s case seeks to stop AT&T from throttling data for customers promised unlimited plans and also requests refunds for those who paid early termination fees after cancelling their plans because of slower connection speeds.
“The lesson to mobile companies: if you promise unlimited data, you’re on the hook to deliver,” Schifferle writes.
This post was updated at 2:48 p.m.
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