AT&T Fined $60 Million in Data ‘Throttling’ Case

An FTC commissioner says AT&T's unlimited data plan for smartphone customers was a "bait-and-switch scam."
Matthew HellerNovember 6, 2019

After five years of litigation, AT&T has agreed to pay $60 million to settle allegations that it “throttled” the data speeds of millions of smartphone customers who had signed up for unlimited data plans.

The company and the U.S. Federal Trade Commission had reached a settlement in August but the amount of the fine was only disclosed on Tuesday after commissioners voted to approve the deal.

The FTC alleged in a lawsuit filed in October 2014 that AT&T misled smartphone customers by charging them for “unlimited” data plans while reducing their data speeds.

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“AT&T promised unlimited data — without qualification — and failed to deliver on that promise,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said Tuesday in a news release. “While it seems obvious, it bears repeating that internet providers must tell people about any restrictions on the speed or amount of data promised.”

In a separate statement, Commissioner Rohit Chopra accused AT&T of a “bait-and-switch scam” that illustrates “the many harms that result from dominant companies operating without the discipline of meaningful competition.” He also said he would have liked to see AT&T pay a larger fine.

“The bottom line is AT&T fleeced its customers to enrich its executives and investors,” Chopra said.

According to the FTC, AT&T unequivocally promised unlimited data but began throttling data speeds in 2011 after customers used as little as two gigabytes of data in a billing period. When customers canceled their contracts after being throttled, the company charged them early termination fees, which typically amounted to hundreds of dollars.

AT&T’s alleged deceptive practices affected more than 3.5 million customers as of October 2014, the FTC’s complaint said.

As part of the settlement, AT&T is prohibited from making any representation about the speed or amount of its mobile data, including that it is “unlimited,” without disclosing any material restrictions on the speed or amount of data.

Its website currently says that for unlimited plans, it “may temporarily slow data speeds when the network is busy.”