FTC issues $40 million fine to TracFone for false ‘unlimited data’ claim

Nate Swanner - Jan 28, 2015, 1:24pm CST
FTC issues $40 million fine to TracFone for false ‘unlimited data’ claim

TracFone has been issued a $40 million fine today by the FTC, who have ruled on a complaint regarding ‘unlimited’ data. The carrier was selling ‘unlimited’ data plans to customers, but heavy throttling made those plans unusable at a certain point. Though this ruling is limited to TracFone, it sets a precedent moving forward. According to the FTC, TracFone broke a promise to its customers, and is guilty of throttling data speeds by as much as 90% for some users.


The FTC is mostly concerned with how TracFone positioned their plan to customers. In a conference call with reporters, FTC Director of Consumer Protection, Jessica Rich, said “This case is about false advertising. It’s not about throttling. We’re not challenging throttling in and of itself.

She went on to say “If it’s clearly disclosed, if a company advertises unlimited, but very clearly discloses their practices with regard to throttling we would not challenge that action.

That’s an important distinction to make, as both Sprint and T-Mobile offer ‘unlimited’ plans. Both do an adequate job of explaining the throttling points on those plans, with T-Mobile cleverly using the throttling point as a means to sell upgraded plans.

According to the FTC, TracFone cut off service for some customers at 4-5 gigabytes of use in a 30-day period, and severely throttled them after as little as one gigabyte of data was used.

Via: Re/Code


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