WASHINGTON (Reuters) - AT&T will pay $60 million to resolve U.S. allegations it misled millions of smartphone customers by charging them for “unlimited” data plans that reduced data speeds if they used too much, the Federal Trade Commission (FTC) said on Tuesday.
As part of the settlement of the 2014 complaint, AT&T is also prohibited from making any representation about the speed or amount of its mobile data without also disclosing any material restrictions on the data.
AT&T issued a brief statement acknowledging that it had reached a settlement with the FTC.
“Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers,” AT&T said in an emailed statement.
The company had fought the FTC in court, saying it had no jurisdiction to bring the case, but lost in 2018.
The FTC alleged that AT&T would begin to slow “unlimited” customers’ data after they used as little as two gigabytes of data in a month. Netflix says that watching its shows uses about 1 gigabyte per hour of standard definition video.
Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said AT&T made promises it did not keep. “While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised,” he said in a statement.
The $60 million will be deposited into a fund to provide partial refunds to both current and former customers who had signed up for unlimited plans prior to 2011 but had their data speeds reduced, or “throttled” by AT&T when their usage went past a certain threshold.
FTC Commissioner Rohit Chopra said he would push for big companies to be held responsible for failing to live up to agreements. “Scammers come in all sizes,” he said in a statement.
“None of these allegations were ever proved in court. We were fully prepared to defend ourselves, but decided settling was in the best interests of consumers,” said Jim Greer, a spokesman for AT&T.
Reporting by Diane Bartz and Lisa LambertEditing by Chizu Nomiyama, David Gregorio and Cynthia Osterman