The FTC has reached a settlement with TracFone in what could be the first of many refunds for screwed-over customers with so-called unlimited data plans.
The US regulator said the cell network must pay back $40m to customers who used its prepaid unlimited data plan and found their connections deliberately strangled, stretching the definition of "unlimited."
TracFone operates the Straight Talk, Net10, Simple Mobile and Telcel America services.
"The issue here is simple: when you promise consumers 'unlimited,' that means unlimited," said FTC Bureau of Consumer Protection director Jessica Rich.
"This settlement means that Straight Talk, Net10, Simple Mobile, and Telcel America customers will be able to get money back from the company for services the company promised but didn’t deliver."
According to the FTC, TracFone didn't warn customers how it would throttle their connection speeds: when the user downloaded more than a certain number of bytes in a month – between 1GB and 3GB depending on the TracFone brand – their transfer rates were cut by 60 to 90 per cent. After 4GB to 5GB had been fetched, the service would be suspended.
The regulator, which sued TracFone alleging it broke truth-in-advertising rules, estimates that roughly a quarter of the network's 25 million or so customers were subject to this throttling policy.
The FTC claims the company deceived "unlimited everything" users by hiding these download limits. The commission further alleged that there was no technical need to throttle speeds, rather the measure was taken solely as a cost-cutting move.
If this sounds familiar, it is because most mobile carriers in the US have similar limits on their "unlimited" plans, something the commission is trying to change. In October, the FTC sued AT&T for failing to properly notify customers that they were throttling traffic for unlimited plans.
Should AT&T lose or settle the case, another 3.5 million people could be receiving refunds. ®