Tracfone Agrees To Pay $40 Million to Settle FTC's Data-Throttling Charges

TracFone Wireless has agreed for settlement at $40 million which would be paid to Federal Trade Commission in order drop the charges of duping millions of customers through false advertising for unlimited data services. TracFone even actively indulged in malpractice of throttling the customer’s speed and cutting off their services entirely on exceeding the certain data allotments.

How TracFone Manipulated The Unlimited Data Plan

TracFone has resorted to controversial ‘data throttling’ practices in order to squeeze and throttle customers who happens to exceed a certain allocate amount of data within a month. TracFone has been accused of generally starting to throttle the customers after 3GB of data usage and it even discontinued the services of many customers who exceeded the undefined usage limit of 4GB.

In September 2013, TracFone started to issue some clarity on its data clarity practices exclusively for its Straight Talk and Net10 brands, signalling that the subscribers would be throttled to a 2G speed after the usage of 2.5 data. FTC has stated that such disclosures were not clear as well as were in fine small print which means consumers likely miss it. FTC even revealed that these practices were carried out not for the technical reasons but it was done in an effort to reduce the high costs associated with providing unlimited data.

TracFone Is Not The Only One Duping Customers

The duping incident of TracFone is not only one which came into the radar of FTC. FTC has made the similar accusation and had brought a lawsuit against AT&T Mobility for using dubious data throttling policies. FTC has alleged that this carrier has misled as many as 3.5 million customers with its scheme of unlimited data plans and later indulging in throttling their data speeds and changing the terms of the plan as well. However AT&T had rubbished such claims and stated that the lawsuit doesn’t have any merit though the case in still continuing.

TracFone Throttling Practices Goes A Long Way Back

According to the complaint filed by the FTC alleges that TracFone has been engaged in throttling practices since 2009. TracFone has extensively advertised about its prepaid monthly plan for around $45 per month wherein customers were entitled to receive unlimited data across various brands such as Stright Talk, Simple Mobile, Net10 and Telcel America.

The director of the FTC’s Bureau of Consumer Protection, Jessica Rich, has emphasised on the point that companies are liable to hold on to their promises and commitments to the consumers in any given case. If a company promises to deliver unlimited data plans then it has to do that.

FTC Build A Path For Claiming Refunds

The settlement made by TracFone has also paved a way wherein the consumers of its varied brands namely Straight Talk, Telcel America, Net10 and Simple Mobile would be able to get refunds from the company for services which it promised but failed to deliver. TracFone is also prohibited from further making any deceptive advertising claims about its data plans.