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TracFone busted on data throttling charges, must pay $40 million fine

The Federal Trade Commission (FTC) isn’t too happy with companies lying about unlimited data plans. Just ask AT&T, which was fined by both the FTC and the Federal Communications Commission (FCC) for capriciously throttling unlimited data plans. Now, the FTC has its eyes set on TracFone Wireless, as it reached a $40 million settlement with the carrier.

TracFone advertises numerous brands across the United States, including Straight Talk Wireless, Simple Mobile, Net10 Wireless, and Telcel America. Across these brands, TracFone constantly advertises plans with “unlimited talk, text, and data.” The problem is TracFone would throttle some of their unlimited data plan customers by roughly 60 to 90 percent. According to the FTC, TracFone conducted this practice in the hopes customers would purchase data-capped plans that would cost them more per month.

Related: The FTC is suing AT&T for throttling customers with unlimited data

In addition, other customers had their data service cut off until their next billing cycle. To make matters worse, since TracFone’s own terms and conditions were extremely vague regarding how the carrier limited customers’ data service, customers had no way of knowing their data was being throttled. TracFone’s advertisements did not mention any throttling policy as of September 2013, either, adding to the confusion.

As a result of the settlement, TracFone must return $40 million to customers who were either throttled or had their data services cut off. TracFone must also “clearly and conspicuously disclose any limits on the speed or quantity of its data service.”