FTC fines AT&T $60 million for misleading consumers

AT&T will now take cryptocurrency as a form of payment

On Tuesday, the Federal Trade Commission (FTC) announced that it had settled its long-running case against AT&T. In 2014, the agency sued the telecommunications company for allegedly misleading consumers about the restrictions on its mobile data plans. The settlement requires the wireless carrier to pay $60 million. The funds will be used to provide partial refunds to consumers who subscribed to one of AT&T’s unlimited data plans before 2011.

AT&T has also agreed not to advertise its current plans without clearly stipulating their restrictions.

‘Unlimited Means Unlimited’

The FTC filed a suit against AT&T because consumers complained its unlimited data plans did not provide the service as advertised.

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In 2010, the company stopped offering unlimited mobile data plans. At the time, subscribers with those packages were allowed to keep them after the change occurred. However, beginning in 2011, the firm started reducing data speeds, or throttling, users who exceeded a certain amount of bandwidth. It did so without notification. In its brief, the FTC noted that the carrier throttled unlimited customers who only used as little as 2 GB of data.

As an example, streaming an hour of Netflix in standard definition consumes about 1 GB.

In 2014, then-FTC Chairwoman Edith Ramirez said that AT&T failed to live up to the promises it made to its customers. “The issue here is simple: ‘unlimited means unlimited,’” noted the administrator. According to the agency’s court filings, the telecom company’s unauthorized data management scheme affected more than 3.5 million users.

When the FTC initially sued AT&T, the carrier called the regulator’s charges “baseless.” The corporation argued that it properly informed its customers about its “unlimited” data plans. Moreover, AT&T stated that its mobile data speed reductions only affected three percent of its customer base.

In 2018, the company changed tack and argued that the FTC had no authority to pursue a case against it. Ultimately, courts rejected the organization’s claim and the lawsuit proceeded.

An AT&T spokesperson told The Verge that the lawsuit’s outcome is “in the best interest of consumers.”

As part of its settlement, AT&T will give affected consumers that still subscribe to its service a bill credit. Conversely, the company will send partial refund checks to former customers as covered in its agreement with the FTC.

Unlimited Still Doesn’t Mean Unlimited

Notably, the FTC is not the first government regulator to fine AT&T over its advertising and data management practices. In 2015, the Federal Communications Commission (FCC) hit the carrier with a $100 million levy for misleading its users.

The agency found that the average unlimited subscriber had their data speed reduced just 12 days into their monthly billing cycle. The FCC also claimed that the network provider wasn’t transparent about its throttling policy.

Nevertheless, AT&T’s settlements with regulators don’t require the carrier to stop throttling its customers. The corporation introduced three new, tiered unlimited data plans in 2017. Its new offerings specifically mention that consumers will experience a speed reduction after hitting a particular usage limit.

Currently, the firm’s “Unlimited & More Premium” plan gives customers 22 GB of high-speed data before reducing their bandwidth.

As the telecom company clearly states the terms of its limited-unlimited plans, its advertising now meets government standards. Around the market, many internet service providers, cloud storage hosts, and other carriers offer conditionally unlimited products.