AT&T to pay $60 million FTC settlement for ‘bait-and-switch’ unlimited data plan

The Federal Trade Commission (FTC) has ordered AT&T to pay $60 million in a settlement regarding unlimited data plans and reduced data speeds. 

The FTC announced the settlement on Tuesday, November 5, which is a result of a complaint from 2014. The complaint alleges that AT&T didn’t fully disclose its policy to its customers with unlimited data plans that data speeds slowed down after a certain amount of data use. The FTC said that more than 3.5 million customers were affected.

The FTC voted 4-0-1 on the settlement. Commissioner Rohit Chopra issued a statement regarding the settlement, saying that “cheating is not competing.” 

“As detailed in the Commission’s complaint, AT&T wanted the rewards without the risks, so it turned its offer of an ‘unlimited’ data plan into a bait-and-switch scam that victimized millions of Americans,” reads Chopra’s statement. “Subscribers were lured in with promises of unlimited data service for a fixed fee, trapped into multiple years of service by punitive termination fees, and then forced to switch to a more expensive tiered plan with overage fees to actually receive the unlimited data they were promised.”

An AT&T spokesperson told Digital Trends, “We couldn’t disagree more with Commissioner Chopra’s baseless characterization of the case.  None of his allegations were ever proved in court.  We were fully prepared to defend ourselves, but decided settling was in the best interests of consumers.”

As part of the settlement, AT&T is now required to disclose all restrictions of their plans “prominently and clearly.” 

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

AT&T’s $60 million penalty will go toward refunding current and former customers that signed up for unlimited data plans before 2011. Current customers will receive an automatic credit to their bills and previous customers will receive checks. Customers will not have to submit a claim for their refund. 

“Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers,” the AT&T spokesperson said.

AT&T announced three new unlimited data plans last week offering unlimited talk, text, and data, as well as the option to add on high-speed data. On its page promoting the plans, AT&T does have a disclaimer for each plan that the company “may slow speeds.”

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