Mobile service provider TracFone fined $40 mn for data throttling

Prepaid mobile service provider TracFone has agreed to pay $40 million by way of settlement with the Federal Trade Commission over its throttling of customers' ''unlimited'' data plans.

According to the FTC's statement, TracFone's advertising promised its customers unlimited data, only to ''throttle'' – or slow down speeds dramatically – after subscribers used certain amounts of data during a monthly billing period.

In certain cases, the company went to the extent of cutting off data service to customers completely when they exceeded these limits, the FTC added.

According to the commission, TracFone, which sold its service under brand names such as Simple Mobile, Net10 and Straight Talk, would throttle customer data flow when they reached anywhere between 1 to 3 gigabytes a month. It added, the company would suspend service completely sometime between 4 and 5 GB.

According to FTC consumer protection bureau director Jessica Rich, the issue was deceptively simple. She said when a company said unlimited but did not then provide unlimited service, it was a clear case of false advertising.

Meanwhile, the company said in a terse statement that it worked with the FTC to reach an amicable settlement.

The commission said: "Beginning today, consumers who had a Straight Talk, Net10, Simple Mobile, or Telcel America unlimited plan before January 2015 can visit http://ftc.gov/prepaidphones to file a claim for a refund.''

"Refunds will be paid to consumers whose data service was slowed or cut off. Consumers who had an unlimited plan but are unsure if their data service was slowed or cut off should still file a claim to find out if they are eligible for a refund," arstechnica.com reported.

Tracfone, which agreed to the financial penalty, was also ordered to stop deceptive advertising of mobile data plans.

In 2013, the company admitted to throttling unlimited data plans after customers hit 2.5GB of data in a month.

According to the FTC's complaint against the company TracFone had been promising unlimited talk, text, and data for $45 a month since 2009 under the brand names mentioned above.
 
"In numerous instances, TracFone failed to disclose or adequately disclose its practice of enforcing fixed limits on the amount of mobile data service its customers could use in a thirty-day service period," the FTC said. "In fact, until at least September 2013, TracFone did not state in most of its advertising or terms and conditions that it would suspend or throttle its customers' mobile data service if they used more than a fixed amount of mobile data in a thirty-day service period.

"In September 2013, TracFone began to include this information for all of its 'unlimited' offerings, but often has tucked it away in small print that is not proximate to its claims of 'unlimited' mobile data service."