FTC Says AT&T Has Misled Millions of Consumers with ‘Unlimited’ Data Promises

The Federal Trade Commission filed a federal court complaint against AT&T Mobility, LLC, charging that the company has misled millions of its smartphone customers by charging them for “unlimited” data plans while reducing their data speeds, in some cases by nearly 90 percent.

The FTC’s complaint alleges that the company failed to adequately disclose to its customers on unlimited data plans that, if they reach a certain amount of data use in a given billing cycle, AT&T reduces – or “throttles” – their data speeds to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video –  become difficult or nearly impossible to use.

“AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise,” said FTC Chairwoman Edith Ramirez. “The issue here is simple: ‘unlimited’ means unlimited.”

According to the FTC’s complaint, AT&T’s marketing materials emphasized the “unlimited” amount of data that would be available to consumers who signed up for its unlimited plans. The complaint alleges that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program. When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars.

The FTC alleges that AT&T, despite its unequivocal promises of unlimited data, began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 gigabytes of data in a billing period. According to the complaint, the throttling program has been severe, often resulting in speed reductions of 80 to 90 percent for affected users. Thus far, according to the FTC, AT&T has throttled at least 3.5 million unique customers a total of more than 25 million times.

According to the FTC’s complaint, consumers in AT&T focus groups strongly objected to the idea of a throttling program and felt “unlimited should mean unlimited.” AT&T documents also showed that the company received thousands of complaints about the slow data speeds under the throttling program. Some consumers quoted the definition of the word “unlimited,” while others called AT&T’s throttling program a “bait and switch.” Many consumers also complained about the effect the throttling program had on their ability to use GPS navigation, watch streaming videos, listen to streaming music and browse the web.

The complaint charges that AT&T violated 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.

FTC staff worked closely on this matter with the staff of the Federal Communications Commission.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of California, San Francisco Division.

The Author

Federal Trade Commission

Federal Trade Commission

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Discuss this

There are currently 4 Comments comments.

  1. Anon2 October 29, 2014 2:25 pm

    What does this have to do with IP?

    At most it is a story about a “legal issue” facing a “technology company.”

    Are we in for a deluge of such stories (legal issues face technology companies every day)?

    Why Gene?

    WHY?

  2. Gene Quinn October 29, 2014 4:10 pm

    Anon2-

    Do I really need to explain what false advertising?

    While I don’t cover every false advertising issue taken up by the FTC, when it deals with a company that is one of the companies we routinely write about I think it is certainly fair game. I also think it is fair game because it deals with wireless technologies, which is another topic we write about a lot. Finally, we don’t always write about IP exclusively. We write about innovations, technologies and the big issues of the day that impact them.

    If you don’t want to read about legal issues facing technology companies the solution is easy. Don’t read them. We will also write about patents first and foremost, we will write about copyrights, trademarks and trade secrets as possible, but our focus is on the law, politics and business of patents and innovation.

    -Gene

  3. anthony October 30, 2014 8:37 am

    How do i cash in on this? I have AT&T and an unlimited data plan. I have had them throttled my speed back once, but that was just because I was testing to see how much data i actually used in a month. It was well over 3 Gigs in a month.

  4. Anon2 October 30, 2014 9:20 am

    Thanks Gene.

    Understood.