TracFone is the largest prepaid wireless provider in the U.S. and it has heavily promoted “unlimited” data offerings since 2009 for about $45 a month.
But the Federal Trade Commission said today that TracFone has agreed to pay $40 million to settle charges that it deceived millions of consumers with “hollow promises of ‘unlimited’ data service.”
TracFone has advertised prepaid, monthly plans with “unlimited” data under various brands, including Straight Talk, Net10, Simple Mobile, and Telcel America. But instead of providing truly unlimited plans, TracFone drastically slowed or cut off consumers’ mobile data after they used more than certain fixed limits in a 30-day period.
The FTC’s complaint says throttled customers often saw slow-downs of at least 60 percent and sometimes even 90 percent, significantly impairing their ability to engage in online activities like streaming video.
“The issue here is simple: when you promise consumers ‘unlimited,’ that means unlimited,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “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.”
Beginning today, consumers who had a Straight Talk, Net10, Simple Mobile, or Telcel America unlimited plan before January 2015 can visit ftc.gov/prepaidphones to file a claim for a refund.
Refunds will be paid to consumers whose data service was slowed or cut off. Consumers who had an unlimited plan but are unsure if their data service was slowed or cut off should still file a claim to find out if they are eligible for a refund.
According to the FTC’s complaint, TracFone marketed “unlimited” plans under its name brands through television and radio commercials, print advertisements, in-store displays and other media. Some of these brands’ advertisements were aimed at specific populations. For example, Telcel America marketed to Spanish-speaking consumers.
Counter to the marketing promises, the FTC alleges that TracFone regularly either slowed down consumers’ data speeds – known as throttling – or cut off their data entirely when they used more than certain fixed amounts of data in a 30-day period. TracFone even terminated all the services (talk, text, and data) of some consumers.