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AT&T to pay $60M to settle FTC allegations of misleading consumers

By Sommer Brokaw
AT&T to pay $60M to settle FTC allegations of misleading consumers
AT&T agreed to pay $60 million in a settlement filed Tuesday of a 2014 complaint over misleading consumers about data limits. File Photo by Roger L. Wollenberg/UPI | License Photo

Nov. 5 (UPI) -- AT&T has agreed in a settlement filed Tuesday to pay $60 million to settle Federal Trade Commission allegations the wireless provider misled smartphone customers with promises of "unlimited" data.

AT&T Mobility charged millions of consumers for "unlimited" data then would "throttle" data speeds after they reached a certain amount of data, the FTC alleged in its complaint filed five years ago.

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"AT&T promised unlimited data -- without qualification -- and failed to deliver on that promise," Director Andrew Smith of the FTC's Bureau of Consumer Protection said in a statement about the filing of the settlement Tuesday. "While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised."

The FTC had alleged that the wireless company began throttling data speeds in 2011 at a threshold as low as 2 GB, impacting more than 3.5 million consumers by the time the complaint was filed on October 28, 2014. And the reduced speeds would make some "everyday applications" like "web browsing, GPS navigation , and streaming video" become difficult or nearly impossible to use.

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The wireless company had "participated in deceptive and unfair acts or practices in violation of Section 5 of the FTC Act," in marketing of its services, the complaint further alleged.

AT&T had challenged the FTC's jurisdiction in the case, but the Ninth Circuit U.S. Court of Appeals ruled last year that the FTC had the jurisdiction to challenge the company's data services marketing.

Under the settlement, AT&T must compensate current customers affected by the throttling of data through a bill credit and send formerly impacted customers a refund check within 90 days.

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Also, under the settlement, AT&T is prohibited from "deceptive advertising of mobile data plans."

AT&T cannot represent the "amount or speed of mobile data" such as saying "data is unlimited" without clearly and prominently disclosing how it would restrict the consumer, the settlement said.

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