The Federal Trade Commission has reached a settlement with AT&T Inc. (NYSE: T) that will see the company pay $60 million to settle allegations that the company unlawfully throttled customers’ data. The settlement resolves a 2014 lawsuit from the FTC that claimed AT&T misled consumers over its data plans and how much data they would be allotted each month before having their access slowed down. According to the complaint, AT&T had started to throttle users’ speeds when they had used as little as 2 gigabytes of data in one month.
The issue apparently began in 2011. The complaint alleges that the company lied to customers about its “unlimited” data plans because it throttled their data if they ever went over a certain threshold. The FTC says that AT&T didn’t notify consumers that if they reached a certain amount of data use in a given billing cycle, AT&T would throttle their speeds. AT&T’s throttling affected up to 3.5 million subscribers, with users having had their speeds slowed down more than 25 million times.
Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a statement, “AT&T promised unlimited data – without qualification – and failed to deliver on that promise. While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised.”
The settlement requires AT&T to deposit that $60 million into a fund that will be used to provide “partial refunds” to customers who signed up for unlimited data plans before the year 2011. AT&T is also prohibited from making any representation about the speed or amount of its mobile data, including that it is “unlimited,” without disclosing any material restrictions. To comply with the settlement, AT&T must prominently and clearly disclose those restrictions.
This is not the first time AT&T has been sued over deceptive marketing practices involving its data plans. In the summer of 2015, the Federal Communications Commission fined AT&T $100 million after receiving thousands of consumer complaints over data throttling. At the time, the fine was the largest proposed amount in the FCC’s history.