AT&T, FTC Settle Data Throttling Complaint; $60 Million To Be Refunded To Consumers

AT&T Mobility LLC agreed to a $60 million settlement for throttling data rates once unlimited data plan customers reached certain levels, settling a complaint filed in 2014, the Federal Trade Commission announced Tuesday.

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

“When any business, big or small, offers an unlimited service for a fixed fee, that business is taking a risk,” Commissioner Rohit Chopra said in a statement. “If customers use much more of the service than projected, the company will take a hit. Conversely, if customers use less than projected, the company will haul in even larger profits. This is how business works. … AT&T wanted the rewards without the risks.”

The FTC accused AT&T of a bait-and-switch scam by reducing data rates after customers with unlimited plans used as little as 2 gigabytes of data in a billing cycle. Some 3.5 million consumers had been affected as of October 2014, the FTC alleged, many of whom had been grandfathered in when AT&T stopped offering unlimited plans in 2010. Chopra noted the scam was fed by AT&T’s early monopoly on the iPhone and fears of losing market share once that monopoly ended.

The FTC won an appeal to the 9th U.S. Circuit Court of Appeals in 2018, establishing its jurisdiction in the case.

The settlement prohibits AT&T from making any claims about speed or amount of mobile data without disclosing restrictions. That means if AT&T advertises an unlimited data plan, it must also disclose data speeds will be restricted after a certain level.

The $60 million will be placed into a fund that will be used to refund current and former AT&T customers who signed up for unlimited plans before 2011 who experienced throttling. Credits will be applied automatically to customer bills.

The FTC voted 4-0-1 to approve the settlement, which was filed in federal court in San Francisco.