FTC Sues AT&T for Deceiving Customers with Unlimited Data Plans

An FTC lawsuit alleges that AT&T deceived its wireless customers and seeks millions of dollars in refunds. (PHOTO CREDIT: Richard Drew / Associated Press)
An FTC lawsuit alleges that AT&T deceived its wireless customers and seeks millions of dollars in refunds. (PHOTO CREDIT: Richard Drew / Associated Press)

For millions of AT&T Inc. wireless customers, unlimited data plans come with a catch, federal regulators said: slower Internet speeds for browsing, video streaming and other Web page loading after reaching a ceiling.

In its first lawsuit addressing so-called data-throttling, the Federal Trade Commission accused the telecommunications giant of misleading smartphone customers by slowing the speed of their data usage without properly notifying them.

“If you make a promise about unlimited consumer service, we expect you to fulfill those promises,” said Edith Ramirez, the agency’s chairwoman.

Instead, she said, AT&T charged mobile customers “for so-called unlimited data plans that were, in reality, not unlimited at all.”

AT&T denied it did anything wrong, calling the agency’s allegations “baseless.”

The suit, filed Tuesday, alleges that AT&T deceived its wireless customers and seeks millions of dollars in refunds for a practice that still continues. Unhappy customers who canceled their plans were charged early-termination fees that typically were hundreds of dollars, Ramirez said.

Beginning in October 2011, AT&T began restricting the data speeds of unlimited data plan customers who exceeded a monthly usage threshold that initially was as low as 2 gigabytes, the agency said.

Smartphone customers can hit that monthly limit by streaming standard definition video for 10 hours and surfing the Web for 55 hours, according to AT&T’s data calculator.

Customers who exceeded the level had their data speeds slowed 60% to 95% for the rest of the billing period.

When the data-throttling began, about 14 million AT&T customers had an unlimited data plan, which cost $30 a month, the agency said. Its investigation found that since then, at least 3.5 million of those customers experienced data usage slowdowns a total of more than 25 million times.

“Consumers have been complaining about throttling for years,” said Delara Derakhshani, policy counsel for Consumers Union. “We’re glad the feds are going after companies that are ripping people off.”

Wayne Watts, AT&T’s general counsel, said the FTC’s decision to sue the company was “baffling.”

AT&T “manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts,” Watts said.

From the start, Watts said, AT&T added notices to the bills of unlimited data customers saying it planned to reduce some users’ data speeds and issued a news release about the change as well.

The July 2011 news release said that starting that Oct. 1, “smartphone customers with unlimited data plans may experience reduced speeds once their usage in a billing cycle reaches the level that puts them among the top 5% of heaviest data users. These customers can still use unlimited data and their speeds will be restored with the start of the next billing cycle.”

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SOURCE: LA Times
Jim Puzzanghera

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