AT&T Agrees to Pay $60 Million to Settle Legal Dispute Over Throttling Smartphone Plans

While every major smartphone carrier advertises unlimited plans, the reality is that all of them come with restrictions. According to the Federal Trade Commission (FTC), AT&T has just agreed to settle a case where it misled millions of customers about the practice.

In most cases, “unlimited” plans come with a finite amount of high-speed 4G or LTE data. Once that data is used, the provider usually reserves the right to throttle, or reduce, a phone’s data speed to much slower 3G levels, especially when the phone is connected to a congested tower.

In the case of AT&T, however, they were accused of not disclosing that there were any restrictions on the plans in question. They also started throttling customers’ speed after only a small amount of data had been used, and often throttled them to the point that even basic web browsing was nearly impossible.

“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.”

“The FTC alleged that, despite AT&T’s unequivocal promises of unlimited data, it 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. AT&T’s alleged practices affected more than 3.5 million customers as of October 2014, according to the FTC complaint.”

As part of the settlement, AT&T is prohibited from advertising speed or unlimited data unless it prominently discloses any restrictions. The FTC specifically stated that “the disclosures need to be prominent, not buried in fine print or hidden behind hyperlinks.”

In the meantime, current and former customers will receive partial refunds. Existing customers will receive the refund in the form of a credit, while former customers will receive checks in the mail.