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AT&T has agreed to pay $60 million to settle litigation with the Federal Trade Commission over advertising that touted the company’s “unlimited data” plans.
The settlement stems from a complaint initially filed in 2014 by the FTC, alleging that the telecom company misled consumers by advertising “unlimited” data plans while at the same time reducing their data speeds (called “throttling”) if they used too much of it.
AT&T challenged the FTC’s jurisdiction, and last year the Ninth Circuit U.S. Court of Appeals ruled that the Commission had the authority to challenge the marketing, allowing its case to continue.
The $60 million fine will be placed into a fund to provide partial refunds to current and former customers of AT&T that were impacted by throttling. Perhaps more significantly, the settlement will also require AT&T to prominently advertise any restrictions on speed or data in ad campaigns for unlimited data plans. “The disclosures need to be prominent, not buried in fine print or hidden behind hyperlinks,” the FTC says.
“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,” an AT&T spokesperson said in a statement.
The vote for the settlement was 4-0-1, with commissioner Rebecca Kelly Slaughter recused.
“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, in a statement. “While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised.”
In a separate statement, commissioner Rohit Chopra referred to the ads as a “nationwide bait-and-switch scam,” adding that “AT&T fleeced its customers to enrich its executives and its investors.”
“We couldn’t disagree more with Commissioner Chopra’s baseless characterization of the case,” AT&T responded in a statement. “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.”
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