This month, the FTC filed a lawsuit against AT&T for deceiving 3.5 million smartphone customers by engaging in a deceptive practice known as “throttling”. According to the FTC, AT&T, the nation’s second-largest cellular carrier, began throttling customers in 2011. When customers with unlimited data plans would begin using "too much" data, the company would throttle or slow down their internet speed, often resulting in a 90% reduction. Most of the consumers that were affected were Apple iPhone users and AT&T often slowed Internet speed for using as little as 2GB.
According to the FTC, AT&T throttled more than 3.5 million customers on at least 25 million occasions, often slowing Internet speeds down so low, consumers were unable to surf the Internet, use the phone’s GPS function, or stream movies. The customers who were affected experienced slowdowns at least 12 days a month.
The issue at hand is that AT&T promised consumers “unlimited” data-not reduced speed data during periodic intervals. This deception is something that the FTC is trying to eradicate, in order to protect cellular consumers. According to the lawsuit, the FTC found that AT&T knew that their consumers would be upset with the throttling of their Internet speeds. As such, their own researchers had urged AT&T marketers to avoid letting consumers know of these practices when signing them up for unlimited data plans.
AT&T maintains that they were completely upfront with customers who purchased unlimited data plans. AT&T’s general counsel, Wayne Watts, said that AT&T has been “completely transparent with customers since the very beginning”.
Yet FTC Chairwoman Edith Ramirez believes that the issue at hand is simple, ” unlimited means unlimited”-and AT&T failed to deliver on that promise.
According to reports, the FTC is seeking financial damages to help repay AT&T customers. They urged wireless customers across the country to contact the FTC if they believe that they have been victims of throttling by AT&T or another cellular provider.
AT&T’s Prior Trouble with the Law
This is not the first time that AT&T has been in trouble for engaging in deceptive marketing tactics. They are currently paying $105 million to settle charges that they loaded consumers’ wireless bills with fraudulent third party fees-without their knowledge or consent. The FTC states that those bogus fees resulted in hundreds of millions of dollars in revenue for the company over a five-year period of time.
This recent lawsuit is just example of the FTC’s new tough stance on cellular carriers. For years, consumer advocates have voiced their concerns that the FTC was too soft on cellular carrier companies, such as AT&T and Sprint. Now, under Ramirez, the commission is out to confront these companies for their deceptive data and privacy practices. Just this past July, the FTC filed a complaint against T-Mobile for “cramming” customer bills.