WASHINGTON—AT&T is writing a check for $60 million to the FTC to settle litigation over allegations that it misled its smartphone customers with what it called “unlimited” data plans, but that instead would often reduce customers’ data speeds for things like video streaming and web browsing.
The allegations stem from a 2014 complaint that said AT&T did not adequately disclose to customers signed up for its unlimited data plan that AT&T would reduce their data speeds if they reached a certain amount of data use in a given billing cycle; according to the claim, that data point was 2 GB. This “throttling” would impact things like streaming video through the phones or web browsing. As of October 2014, an alleged 3.5 million customers were impacted by this practice.
“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. “While it seems obvious, it bears repeating that internet providers must tell people about any restrictions on the speed or amount of data promised.”
In addition to the monetary portion, the settlement prohibits AT&T from making any representation about the speed or amount of mobile data without disclosing any material restrictions. The FTC says the disclosures must be prominent and not hidden in fine print or behind hyperlinks.
The $60 million will be used to help provide partial refunds to current and former customers that signed up for unlimited plans but experienced throttling issues. Customers will not need to file claims for a refund.