Consumers Due $40M Over 'Hollow' Promise of Unlimited Data

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The largest prepaid mobile phone service company in the country will pay $40 million to settle charges that it duped consumers with the idea they would be getting unlimited data, the Federal Trade Commission said on Wednesday.

TracFone -- which also markets Straight Talk, Net10, Simple Mobile and Telcel America service -- was accused by the FTC of duping its customers with the idea they were getting unlimited data. But those who exceeded certain limits were either cut off or had their data access slowed to a crawl, the FTC said.

"The issue here is simple: when you promise consumers 'unlimited,' that means unlimited," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. "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."

Throttling Data

If you had an "unlimited" plan from 2009 through December with TraceFone, Straight Talk, Net10, Simple Mobile or Telcel America, you can file a claim for a refund through the FTC's website. Those whose data was either slowed or cut off are eligible. If you're unsure, the FTC recommends you still file a claim.

TracFone used a process known as throttling to slow or stop data flow to high-use consumers. By cutting data speeds by up to 90 percent, those who were streaming video or using other data-intensive services were effectively shut down. But TracFone went even further, the FTC said. Some consumers were actually completely shut down, including the termination of their talk, text and data. The slowing policy generally went into effect after the use of 3GB of data and suspension took place at 4GB-5GB of data use, the FTC said.

In addition to refunding the $40 million, TracFone agreed to clearly disclose its policies and no longer make deceptive marketing claims about its plans. The FTC lodged similar charges against AT&T (T), but those are being contested in court.
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