AT&T Mobility has agreed to pay $60 billion to settle a Federal Trade Commission allegation it misled smart phone customers by charging for unlimited plans while cutting data speeds.
That is according to the FTC, whose complaint dates back to 2014, when it alleged that AT&T had not disclosed that when customers reached a certain data threshold, though they could still use data, AT&T then throttled their speeds to the point that many common apps--browsing, streaming--became tough if not impossible, to use.
“AT&T promised unlimited data—without qualification—and failed to deliver on that promise,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection, in a statement. “While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised.”
"Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers," said AT&T in a statement.
The FTC said AT&T had started throttling speeds for unlimited data plans in 2011.
AT&T had challenged the FTC's jurisdiction over the case, but a federal court ruled the FTC did indeed have the authority.
AT&T has agreed not to make any representations about speed or data amounts without disclosing any restrictions, and disclosures that are prominent, not "buried in fine print or hidden in hyperlinks," said the FTC.
The $60 million will be placed in a fund to provide partial refunds to current and former customers.
The vote was 4-0-1, with commissioner Rebecca Kelly Slaughter recused.
"If consumers don’t pay up when a company fails to live up to its promises, they are often pummeled with late fees, collection calls, and negative credit reporting," said commissioner Rohi Chopra in a separate statement. "Yet when dominant companies don’t deliver on their end of the bargain, too often they can turn a profit, as their customers feel powerless to do anything about it. Cheating is not competing. Without effective government and private enforcement, we will not achieve all of the benefits that competitive markets can deliver."
"We couldn’t disagree more with Commissioner Chopra’s baseless characterization of the case," AT&T said. "None of his allegations were ever proved in court. We were fully prepared to defend ourselves, but decided settling was in the best interests of consumers."
A federal court still has to sign off on the settlement, but that is usually pretty pro forma.
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Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.
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