TracFone Paying $40M to Settle FTC Complaint

Agency Says Company Throttled 'Unlimited' Data Plan Customers

The Federal Trade Commission today (Jan. 28) said TracFone has agreed to pay $40 million to settle FTC charges that it deceived consumers with promises of unlimited data plans.

The Federal Communications Commission has also been looking hard at data plans and promises.

The FTC charged that since 2009, the prepaid mobile plan provider advertised its monthly plans in TV and radio ads, among other media, as offering unlimited data, only to slow or cut off data after a certain fixed limit.

TracFone markets service under various brands, including Net10, Straight Talk, Simple Mobile and Telcel America.

The FTC alleged TracFone "generally slowed" data after a customer used 1-3 gigabytes, and suspended it at 4-5 gigabytes. The FTC said no technical reasons, such as reducing congestion, accounted for the limits, but were instead to reduce the higher costs of providing unlimited data.

“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, in a statement. “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.”

This is the second case brought by the FTC over the issue. Back in October, the FTC filed a similar complaint against AT&T, which is fighting what it called a baffling and baseless charge. The vote to approve the complaint was 5-0.

The FCC has also been actively investigating so-called "throttling practices." FCC chairman Tom Wheeler sent letters to major nationwide wireless carriers about these practices -- he has said that consumers deserve to get what they pay for.

Following those lettersVerizon announced that it would not proceed with plans to "optimize" its network for customers with unlimited plans by managing speeds of the top 5% of data users with unlimited plans at peak periods.

Back in July 2014, the FCC issued an advisory to ISPs, including wireless, about providing "accurate information" to their customers.