AT&T will issue partial refunds as part of a $60 million settlement it made with the FTC for allegedly failing to disclose how AT&T's unlimited data plans could throttle your mobile internet speeds.
AT&T has agreed to pay a $60 million fine to the Federal Trade Commission for throttling the mobile internet speeds of customers who had subscribed to "unlimited" data plans.
The FTC initially brought the case against AT&T in 2014, claiming the carrier misled millions of customers over how its data plans were not exactly unlimited. Starting in 2011, the carrier began throttling customers' the speeds by as much as 80 to 90 percent after using as little as 2GB of data in a billing period, the FTC claimed at the time.
In a lawsuit, the commission charged that carrier had failed to publicly disclose the data-throttling practices, which ensnared at least 3.5 million customers. However, AT&T claimed it had mentioned the speed caps via customer bill notices and in a press release before the data plans were launched.
Following a protracted legal battle, AT&T eventually agreed to settle the lawsuit by paying a $60 million fine, which was approved by four out of the five FTC commissioners; Rebecca Kelly Slaughter recused herself. However, the amount is about $40 million less than what the FTC had originally desired.
"While I would have liked to see AT&T pay more for the company's scheme, I fully appreciate the risks and resources associated with litigation," said FTC Commissioner Rohit Chopra in a statement on the settlement. He went on to blast AT&T's unlimited data plans as an example of a mobile carrier holding too much power over the market.
"This scam went hand-in-hand with AT&T's early monopoly in the iPhone market," he said. It wasn't until 2011 when the iPhone were available on Verizon. But even then, many iPhone consumers were locked into AT&T contracts, thinking they would get unlimited data, when in reality the carrier was throttling their speeds, Chopra added.
As part of the settlement, AT&T must also ensure any use of the term "unlimited" to describe or market a mobile plan disclose any restrictions on speed or data. "For example, if an AT&T website advertises a data plan as unlimited, but AT&T may slow speeds after consumers reach a certain data cap, AT&T must prominently and clearly disclose those restrictions," the commission said.
You can now find those disclosures on AT&T's latest unlimited data plans, which were introduced last week. The marketing notes the carrier may slow your plan down to 2G speeds when the network is busy and if your data consumption passes a certain threshold, depending on what plan you're on. Your video streaming can also be capped to standard definition (480p).
"Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers," an AT&T spokesperson said in response to the settlement.
Despite the settlement, Chopra said the FTC needs to continue to scrutinize the practices of AT&T and other major firms, saying "scammers come in all sizes." While the commission will often issue harsh penalties against small companies, Chopra accused the commission of taking a soft approach when it comes to large corporations. "AT&T's massive scam is a reminder that we must focus on the practices of a business, rather than the size of a business," he added.