This month, the FTC filed a lawsuit against AT&T for deceiving 3.5
million smartphone customers by engaging in a deceptive practice known
as “throttling”. According to the FTC, AT&T, the nation’s
second-largest cellular carrier, began throttling customers in 2011. When
customers with unlimited data plans would begin using "too much"
data, the company would throttle or slow down their internet speed, often
resulting in a 90% reduction. Most of the consumers that were affected
were Apple iPhone users and AT&T often slowed Internet speed for using
as little as 2GB.
According to the FTC, AT&T throttled more than 3.5 million customers
on at least 25 million occasions, often slowing Internet speeds down so
low, consumers were unable to surf the Internet, use the phone’s
GPS function, or stream movies. The customers who were affected experienced
slowdowns at least 12 days a month.
The issue at hand is that AT&T promised consumers “unlimited”
data-not reduced speed data during periodic intervals. This deception
is something that the FTC is trying to eradicate, in order to protect
cellular consumers. According to the lawsuit, the FTC found that AT&T
knew that their consumers would be upset with the throttling of their
Internet speeds. As such, their own researchers had urged AT&T marketers
to avoid letting consumers know of these practices when signing them up
for unlimited data plans.
AT&T maintains that they were completely upfront with customers who
purchased unlimited data plans. AT&T’s general counsel, Wayne
Watts, said that AT&T has been “completely transparent with
customers since the very beginning”.
Yet FTC Chairwoman Edith Ramirez believes that the issue at hand is simple,
” unlimited means unlimited”-and AT&T failed to deliver
on that promise.
According to reports, the FTC is seeking financial damages to help repay
AT&T customers. They urged wireless customers across the country to
contact the FTC if they believe that they have been victims of throttling
by AT&T or another cellular provider.
AT&T’s Prior Trouble with the Law
This is not the first time that AT&T has been in trouble for engaging
in deceptive marketing tactics. They are currently paying $105 million
to settle charges that they loaded consumers’ wireless bills with
fraudulent third party fees-without their knowledge or consent. The FTC
states that those bogus fees resulted in hundreds of millions of dollars
in revenue for the company over a five-year period of time.
This recent lawsuit is just example of the FTC’s new tough stance
on cellular carriers. For years, consumer advocates have voiced their
concerns that the FTC was too soft on cellular carrier companies, such
as AT&T and Sprint. Now, under Ramirez, the commission is out to confront
these companies for their deceptive data and privacy practices. Just this
past July, the FTC filed a complaint against T-Mobile for “cramming”