FTC says AT&T misled customers with unlimited data

29 Oct 2014 | Author: | No comments yet »

FTC Sues AT&T for Misleading Customers Over Unlimited Data.

The Federal Trade Commission seems to have had it with AT&T. AT&T is being sued by the government over allegations it misled millions of smartphone customers who were promised unlimited data but had their Internet speeds cut by the company — slowing their ability to open web pages or watch streaming video.

For millions of AT&T Inc. wireless customers, unlimited data plans come with a catch, federal regulators said: slower Internet speeds for browsing, video streaming and other Web page loading after reaching a ceiling. According to the agency’s announcement: The FTC alleges that AT&T, despite its unequivocal promises of unlimited data, began throttling data speeds in 2011 for its unlimited data plan customers after they used as little as 2 gigabytes of data in a billing period. Federal Communications Commission Chairman Tom Wheeler in July said he was “deeply troubled” by Verizon’s plan to slow speeds from some heavy Internet users. Some customers, the agency said, had data speeds slowed by nearly 90 percent. “If you make a promise about unlimited service, we expect you to fulfill those promises,” FTC Chairwoman Edith Ramirez said as she announced the lawsuit. Smartphone customers can hit that monthly limit by streaming standard definition video for 10 hours and surfing the Web for 55 hours, according to AT&T’s data calculator.

AT&T agreed earlier this month to pay $105 million to settle claims by the FTC, the FCC and state officials over allegations of mobile “cramming” — that is, unlawfully billing customers for charges originated by other companies for services such as horoscopes and ring tones. In a statement on its website, AT&T dismissed the FTC’s allegations as “baseless” and “baffling.” AT&T argues that it has been “completely transparent with customers since the very beginning” of its throttling program, informing them of changes in billing statements and through a national press release.

Its investigation found that since then, at least 3.5 million of those customers experienced data usage slowdowns a total of more than 25 million times. “Consumers have been complaining about throttling for years,” said Delara Derakhshani, policy counsel for Consumers Union. “We’re glad the feds are going after companies that are ripping people off.” AT&T “manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts,” Watts said. Maurice Turner of Anaheim, Calif., complained about a half-dozen times when he started noticing sharply slower speeds loading Google searches or GPS maps.

Some apps would simply crash on him. “It’s really unfair to have my speed cut down like that,” Turner said in an interview. “It’s unreasonable that only people with unlimited plans are being punished for using the service the way AT&T advertised it.” Turner says he wants the company to honor the original contract for unlimited data service. These customers can still use unlimited data and their speeds will be restored with the start of the next billing cycle.” But Ramirez said the notifications were “inadequate and inconspicuous” and did not provide “full and adequate information about the extent of data-throttling and impact on services.” Company focus group research into slowing data above certain thresholds found that consumers “thought the idea was ‘clearly unfair,'” and one participant said it “seems misleading to call it unlimited,” the suit said. The complaint alleges that, even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program.

When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars. In August, Public Knowledge, a consumer advocacy group, complained to AT&T and the other major wireless providers — Verizon Wireless, Sprint Corp. and T-Mobile US Inc. — that they weren’t clear about when data throttling kicks in. The FTC has been on something of a roll with wireless regulation lately, including its early-October settlement with AT&T and a July complaint that accused T-Mobile of cramming.

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