AT&T to pay $60 million restitution for throttling 'unlimited' data customers

Cal Jeffrey

TS Evangelist
Staff member

FTC Commissioner Rohit Chopra bluntly referred to the company's throttling policies as a "nationwide bait-and-switch scam" in his statement regarding the settlement.

"AT&T baited subscribers with promises of unlimited data, trapped them in multi-year contracts with punishing termination fees, and then scammed them by choking off their access unless they moved to a more expensive plan. The AT&T throttling scandal is an important case study into how dominant firms operating without meaningful competition can easily renege on their contractual obligations and cheat consumers who have almost no recourse."

Today, legal counsel for AT&T agreed to deposit $60 million into a fund earmarked for "partial refunds" for affected customers. Only those who paid for unlimited data plans before 2011 are eligible as that was the year the company initiated its data throttling policy.

The court documents further stipulate that AT&T may not market plans using speed or data limits without disclosing restrictions in an abundantly evident manner.

"For example, if an AT&T website advertises a data plan as unlimited, but AT&T may slow speeds after consumers reach a certain data cap, AT&T must prominently and clearly disclose those restrictions," said the FTC in its press release.

"AT&T promised unlimited data—without qualification—and failed to deliver on that promise. While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised."

Today's settlement stems from an FTC lawsuit filed in 2014, where the FTC claims that the company throttled some customers by reducing their data speed by as much as 90 percent, even after as little as 2GB of use in a billing cycle. Everyday mobile tasks like web browsing, GPS navigation, and watching streaming video become nearly impossible to perform once throttled that low.

"When any business, big or small, offers an unlimited service for a fixed fee, that business is taking a risk," said Chopra. "If customers use much more of the service than projected, the company will take a hit. Conversely, if customers use less than projected, the company will haul in even larger profits. This is how business works. AT&T wanted the rewards without the risks, so it turned its offer of an 'unlimited' data plan into a bait-and-switch scam that victimized millions of Americans."

AT&T did not admit or deny any wrongdoing in the court documents, but it did issue a statement thanking the commission, while acknowledging that it stopped behaving badly "years" ago.

"We appreciate the FTC for working with us to resolve this matter," AT&T said in an emailed statement. "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."

The company has also unveiled three new "unlimited" data packages that offer up to 100GB of unthrottled data.

The FTC estimates that over 3.5 million customers are due a partial refund. Affected parties do not need to submit claims for reimbursement. Current eligible AT&T customers will see it as a credit on their billing statements. Those who have moved on will be receiving a check.

It is unclear how much users should expect to receive, but crunching the numbers provided by the settlement shows it's a paltry sum. It works out to about $17.14 or less for each affected consumer.

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BlackCatRokusho

TS Rookie
Fines like this are but a pittance compared to the profits they reaped from this practice. Fines should be damaging, the same size if not more than what a company made by breaking laws to either save or make more money.
 
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p51d007

TS Evangelist
60,000000 divided by 3.5 million comes out to LESS than 18 dollars per person.
BUT! This was a class action. That means the bulk of the money goes to the law
firm, and the plaintiffs will receive MAYBE a buck or two.
 

p51d007

TS Evangelist

Once again the lawyers take their cut and leave the scraps for all the damaged parties .... don't you just love American Justice .....

Why do you think you see so many "if you or a loved one have been injured or killed...you may be entitled to financial compensation" tv ads?
Plus, don't think Washington will stop class action suits. With the amount of payoff money the law firms pay the K-street lobbyist, who feed the lDIOTS in congress & the senate, you think they will stop it?
And people wonder how someone elected to office, lives in one of the highest real estate markets in the USA (DC metro area), on less than 200k, while maintaining a residence in their home state, and, become MILLIONAIRES in a few short years. Not to mention voting themselves a raise, getting a FULL salary retirement, excellent health care and on and on.
 
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ZedRM

TS Member
AT&T are shysters. They always have been. Do business with them and you're going to get ripped off. Same with Comcast...
 
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Darth Shiv

TS Evangelist
AT&T are shysters. They always have been. Do business with them and you're going to get ripped off. Same with Comcast...
Don't blame them. The deck is stacked to allow this. Your market is all pro business and basically no regulation. It is DESIGNED for them to scam you and get a light wrist tap as punitive action.
 
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ZedRM

TS Member
Don't blame them. The deck is stacked to allow this. Your market is all pro business and basically no regulation. It is DESIGNED for them to scam you and get a light wrist tap as punitive action.
"Your market"? Curious what you mean?
 

Darth Shiv

TS Evangelist
"Your market"? Curious what you mean?
US. Capitalist market where companies are allowed to gouge consumers with extremely shoddy, immoral business practices. Extremely common in the US. Startlingly common.

You don't get away with anywhere near that sort of thing in Australia and we are alarmingly being led to US style business philosophy.
 

ZedRM

TS Member
The US economy is one of the most regulated economy's in the world next to the UK & EU. Almost every other economy are virtual oceans of corruption, shady dealings and backroom nonsense. Sorry man, but you're just wrong on that one.
 
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Darth Shiv

TS Evangelist
The US economy is one of the most regulated economy's in the world next to the UK & EU. Almost every other economy are virtual oceans of corruption, shady dealings and backroom nonsense. Sorry man, but you're just wrong on that one.
By what measure??? Your regulation is non-existent compared to Australia's.

We literally have a law for truth in advertising where you have payment provider protected rights to full refund if the seller lies/misleads in word or writing with claims about their products. The credit card companies, banks will automatically full refund you.

Also we have minimum statutory 2 year protection from faults on electronic devices like smartphones. They HAVE to fix devices without extended warranties/additional payments. ANY manufacturing fault or major software defect etc.
 

ZedRM

TS Member
By what measure??? Your regulation is non-existent compared to Australia's.
Myth

We literally have a law for truth in advertising where you have payment provider protected rights to full refund if the seller lies/misleads in word or writing with claims about their products. The credit card companies, banks will automatically full refund you.
We have those too.

Also we have minimum statutory 2 year protection from faults on electronic devices like smartphones. They HAVE to fix devices without extended warranties/additional payments. ANY manufacturing fault or major software defect etc.
You've got us on that point, there are no mandatory warranty periods. There are reasons for that, but I agree Australia has the right idea there.