FTC Forces TracFone To Refund Customers’ Money For Throttling Speeds On ‘Unlimited Data’ Plans – True Unlimited Plans Soon?

Fair Trade Commission (FTC) has succeeded in forcing TracFone, a Mobile Service provider to refund its customers’ money over ‘Unlimited Data Plans’, which had throttling enabled.

The FTC has reached a settlement with TracFone. This landmark breakthrough could be the first of many refunds for screwed-over customers with so-called unlimited data plans. The US regulator which deals with matters involving service providers and the way they do business, said the cell network must pay back $40 million to customers who used its Prepaid Unlimited Data Plan and found their connections deliberately strangled.

The FTC successfully argued that throttling data speed unduly stretched the definition of “unlimited.” Speaking about the victory, FTC Bureau of Consumer Protection director Jessica Rich said,

“The issue here is simple: when you promise consumers ‘unlimited,’ that means unlimited. 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.”

According to the FTC, TracFone didn’t specifically warn or inform customers how it would throttle their connection speeds when the user downloaded more than a certain number of bytes in a month. Depending on the various sub-brands, TracFone cut its customers’ data transfer rates by 60 to 90 percent. However, what truly nailed the case was the fact that after 4GB to 5GB had been fetched, TracFone would go ahead and suspend the service. Needless to say this clearly violates the definition of the word ‘unlimited’.

FTC alleged TracFone broke truth-in-advertising rules. The regulator estimates that roughly a quarter of the network’s 25 million or so customers were subjected to this unfair throttling policy. The FTC claimed the company deceived “unlimited everything” users by hiding these download limits. The commission further maintained that there was no technical need to throttle speeds. The regulator insisted that TracFone deployed the measure solely as a cost-cutting move.

Majority of the mobile carriers in the U.S. have similar limits on their “unlimited” plans. In fact, mobile companies have always been very coy about ‘Unlimited’ plans. However, the FTC may be getting to them, albeit slowly.

At present there is no dearth of lawsuits in the United States over such ‘unfair’ trade practices that initially lures the customers with ‘unlimited’ offerings, only to restrict the ability of the platform by severely curtailing the data transfer speeds, leaving them akin to dial-up.

Interestingly, if the case against AT&T ends with similar results, another 3.5 million people could soon get refunds. Let’s hope such rulings help in ushering the era of ‘True Unlimited’ plans

[Image Credit | Droid Galaxy, Flickr]