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Photo: Joan Cros Garcia - Corbis/Contributor/Getty Images
AT&T agreed to pay $60 million on Tuesday to settle a Federal Trade Commission complaint that the company misled unlimited data plan customers when it slowed their speeds.
Driving the news: The $60 million will go into a fund that AT&T will use to provide partial refunds to both current and former customers who signed up for unlimited plans before 2011 and had their data speeds slowed by AT&T. The FTC said the carrier throttled the speeds of 3.5 million customers, per its complaint.
- The settlement also requires the company to prominently disclose any future restrictions on speed or the amount of data within its mobile plans.
Background: AT&T faced complaints from both the FTC and the Federal Communications Commission. The agencies claim the company failed to adequately inform smartphone customers with unlimited data plans that, if they reached a certain amount of data use in a billing cycle, their speeds would be reduced to the point that many applications would be difficult to use.
- The FTC filed its complaint in 2014, and won a victory at the 9th Circuit Court of Appeals when AT&T argued the agency lacked jurisdiction over the telecom company.
What they're saying:
Andrew Smith, director of the FTC's Consumer Protection Bureau, said AT&T failed to deliver on its promise of unlimited data. Democratic Commissioner Rohit Chopra, who supported the settlement, described the case as an example of how a dominant firm can cheat customers.
- "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," Chopra said in a statement.
An AT&T spokesperson said the company disagrees with Chopra's "baseless characterization" of the case. "None of his allegations were ever proved in court," AT&T said in a statement. "We were fully prepared to defend ourselves, but decided settling was in the best interests of consumers.”