FTC Levies $40M Fine Against TracFone for Throttling Unlimited Data Customers

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In recent months, the Federal Trade Commission has taken a significant interest in carrier throttling practices and today handed down a ruling that could have future ramifications for carriers who throttle their unlimited customers.

As reported by Re/code, the FTC has ordered prepaid wireless carrier TracFone to pay $40 million to consumers who paid for unlimited service and were then throttled after reaching certain data limits.

TracFone advertised "unlimited text, talk, and data" for $45 a month under the brands Straight Talk, Net10, Simple Mobile, and Telcel America, and until September 2013, did not clearly disclose its throttling policies that saw customers experiencing data speeds that were cut by up to 90 percent, thereby violating the FTC Act.

While this ruling only affects TracFone at the current time, there are several other carriers that have similar practices for their unlimited customers. AT&T and Verizon no longer offer unlimited data plans, but continue to provide unlimited data for many people who remain on grandfathered plans. AT&T has engaged in throttling practices for years, often cutting off customers who exceed 5GB of LTE data usage.
"The issue here is simple: when you promise consumers 'unlimited,' that means unlimited," said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "This settlement means that Straight Talk, Net10, Simple Mobile, and Telcel America customers will be able to get money back from the company for services the company promised but didn't deliver."
Last year, Verizon planned to throttle its high-usage unlimited data LTE customers, sparking interest from FCC chairman Tom Wheeler, who said he was "deeply troubled" by the decision. Verizon ultimately reversed course and opted not to throttle its unlimited customers, but the FCC's attention was already roused, and the agency began questioning all carriers on their unlimited throttling practices.

The government's interest in carrier throttling practices led the FTC to file a federal complaint against AT&T in October of 2014, accusing the carrier of misleading its smartphone customers by charging them for unlimited data and then going on to reduce data speeds. Based on today's TracFone decision, AT&T may also be facing hefty fines in the future, and the FTC's ongoing involvement in carrier throttling of unlimited customers could finally put an end to the practice.

Article Link: FTC Levies $40M Fine Against TracFone for Throttling Unlimited Data Customers
 

blevins321

macrumors 68030
Dec 24, 2010
2,760
80
Winnipeg, MB
I'd say that's it folks. No more unlimited plans for the grandfathered customers on VZ/ATT. Once the contract is up they're free to change plan terms.
 

ArtOfWarfare

macrumors G3
Nov 26, 2007
8,855
4,645
Can we do something about the regional broadband monopolies (IE, Comcast, Verizon, Time Warner?) They concern me more than the cellular providers, which at least compete with each other so have some interest in screwing over their customers less so that people will switch.
 
OK FTC, but dole out the fines to more than just the cheap(est) players. It will be wrong to fine a player like this while allowing AT&T, Verizon etc to carry on without fines. Of course, AT&T & Verizon make big campaign contributions so lets see if the Gov punishes wrongdoing or if this "wrongdoing" is defined as not contributing enough to campaigns.

Seems odd that a relatively small player would get a headline fine for throttling while the much bigger, much deeper pocketed players are left out.
 

k1121j

macrumors 6502a
Mar 28, 2009
846
557
New Hampshire
I'd say that's it folks. No more unlimited plans for the grandfathered customers on VZ/ATT. Once the contract is up they're free to change plan terms.
i agree it will end the contracts but either way they will be forced to state what they are stilling in actual terms not be allowed to false advertise IE Unlimited thats limited.


as an original AT&T unlimited customer they may want to think twice before ending the unlimited plan i may just find another carrier...and its not one of the big two I'm eyeballing these days
 

jtrenthacker

macrumors regular
Apr 12, 2012
186
579
GOOD! I hope they fine the hell out of all of them. I'm an unlimited customer with AT&T and I've now been bitten by their throttling practices. We just recently moved across the country. Before the move, I worked at a university that had campus wide wifi and of course I had wifi at home. Between the two, I hardly ever used LTE. After we moved, we were without internet for three weeks. I would use the LTE for everything on my phone including Netflix. Soon I was getting texts that I will be throttled if I go over 5gb. Sure enough, eventually LTE became almost unusable. Then last week, I start getting texts, emails, and an actual letter telling my to stop tethering! Mind you, we've had internet at the house for a couple weeks now. I have never used tethering. They say if I continue they will change my plan without my consent. I called the customer service line and bitched about it. They didn't really apologize. They just tell me my plan will stay the same and that there may be apps on my phone that act like tethering (total BS). We have never had a bad experience with AT&T until now. All because I went over 5gb in data on my UNLIMITED plan? Kiss my att.
 

LawJolla

macrumors member
Sep 29, 2013
53
440
I'm an ATT "Unlimited" customer. One thing to keep in mind is, unlike Verizon, they still subsidize phones on this plan.

I'd take truly unlimited data (or even reasonably throttled, like 25gb) over a subsidized phone, but it does offset things a little.
 

Koodauw

macrumors 68040
Nov 17, 2003
3,941
177
Madison
Dear FCC,

Please bring the pain that is trying to use a throttled phone to AT&T. They need to know the pain they have inflicted.
 

Z400Racer37

macrumors 6502a
Feb 7, 2011
702
1,654
Everyone to whom throttling would be relevant knows about throttling, and nows the carriers do it. And its in the contract that they can do it. It's not like this stuff is a secret. So they did it on some people, and those people are now pissed because they don't like the terms of the contract that they signed anymore. But worry not, bureaucrats to the rescue. Let's just steal their money back because they're not happy with their decision anymore.

Losers. :rolleyes:
 

GrecoISU

macrumors member
Apr 2, 2011
99
15
Everyone to whom throttling would be relevant knows about throttling, and nows the carriers do it. And its in the contract that they can do it. It's not like this stuff is a secret. So they did it on some people, and those people are now pissed because they don't like the terms of the contract that they signed anymore. But worry not, bureaucrats to the rescue. Let's just steal their money back because they're not happy with their decision anymore.

Losers. :rolleyes:
You're so cute! :rolleyes:
 

jtrenthacker

macrumors regular
Apr 12, 2012
186
579
Everyone to whom throttling would be relevant knows about throttling, and nows the carriers do it. And its in the contract that they can do it. It's not like this stuff is a secret. So they did it on some people, and those people are now pissed because they don't like the terms of the contract that they signed anymore. But worry not, bureaucrats to the rescue. Let's just steal their money back because they're not happy with their decision anymore.

Losers. :rolleyes:
Are you the AT&T customer service rep I talked to the other day? Huh, small world.
 

eoblaed

macrumors 68030
Apr 21, 2010
2,606
2,166
Now if only we can get AT&T to stop throttling our 'unlimited' accounts at such low thresholds .... and let us tether. :)
 

idiiamots

macrumors member
Feb 15, 2010
71
50
Seattle, WA
Is T-Mobile going to run afoul of this when they advertise Unlimited internet, which really means "unlimited 2G and limited 4G LTE" or are they fine because they spell it out?
 

NokX

macrumors member
Mar 12, 2003
80
40
Knoxville, TN
As much as I hate the throttling of data (I'm with AT&T), if you agreed to their terms you agreed to the throttling. You still get unlimited data, you just agreed to a little line that says they can throttle that unlimited data after a certain limit.

It sucks but every single one of us who signed a contract agreed to those terms.
 

Bryan Bowler

macrumors 68040
Sep 27, 2008
3,815
3,730
This is good. Let's hope this puts an end to the unfair practice that AT&T has been doing. Unlimited should mean unlimited. I've been paying for it for 6 years and when I need to use a little extra data, it should be there for me.

Bryan

----------

As much as I hate the throttling of data (I'm with AT&T), if you agreed to their terms you agreed to the throttling. You still get unlimited data, you just agreed to a little line that says they can throttle that unlimited data after a certain limit.

It sucks but every single one of us who signed a contract agreed to those terms.
Yes, it's vaguely written into the terms, but it's still deceptive advertising from an overall point of view.

Bryan
 

jtrenthacker

macrumors regular
Apr 12, 2012
186
579
As much as I hate the throttling of data (I'm with AT&T), if you agreed to their terms you agreed to the throttling. You still get unlimited data, you just agreed to a little line that says they can throttle that unlimited data after a certain limit.

It sucks but every single one of us who signed a contract agreed to those terms.
But I did not agree to the harassment and accusations that I tether because I'm using the unlimited data that I agreed to pay for.
 

ron7624

macrumors 68020
Oct 14, 2011
2,228
437
Houston, Texas area
And this after giving up my unlimited plans after getting throttled at 5 gb. IMO, it was a pretty useless plan with only 450 min of talk. ATT unlimited phone plans were not that great for me.
I'm spending less money and have 40 gb of data that I don't come close to.
 

psingh01

macrumors 65816
Apr 19, 2004
1,489
499
it doesn't matter if some carriers respond by ending their "unlimited" plans if those are just unlimited in name only anyway.

at&t's unlimited plan is worse than tmobile's 5gb plan. still have to pay more for unlimited mins and text.
 

nutmac

macrumors 601
Mar 30, 2004
4,717
3,157
I can see how this is bait and switch.

But I would instead like carriers be more transparent about bandwidth.

My ideal carrier would offer the following.

1. Todays widget that reports current data usage like Verizon.


2. When certain amount of bandwidth is used, offer customers a choice between (1) automatically charging $10 to get additional bandwidth (e.g., AT&T and Verizon) or (2) automatically throttling to lower speed, such as 128 Kbps (e.g., T-Mobile). Customers should be able to switch to different option at any time.

3. Data rollover from 2 or more billing cycles.

4. No distinction between hotspot/tethering and regular mobile data consumption.

5. Get rid of unlimited tier. As much as I like the idea of Sprint's "we will only throttle you if the tower gets congested", in reality, such things are subject to abuse. I prefer more transparent, consistent policy with as few rules and exceptions as possible.
 

Col4bin

macrumors 68000
Oct 2, 2011
1,727
1,286
El Segundo
Funny how the FTC targets a much smaller entity like Straight Talk. Almost a warning shot at Verizon, AT&T and Sprint who have all been accused of throttling at one time or another. But I guess the FTC, being a government organization, are giving these guys a pass considering they're all in bed with the Telecom lobbyists on Capital Hill, funneling huge amounts of $$$ into our politician's campaign coffers. :cool:
 
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