The Federal Trade Commission is ordering US wireless carrier TracFone to pay $40 million as a penalty for promising “unlimited” data to customers, but then throttling connection speeds or canceling service altogether after customers use more than a certain amount of data.

The FTC isn’t saying that there’s anything wrong with throttling data or terminating service when a customer uses too much data. But what the agency is saying is that wireless carriers can’t call their service unlimited if they’re going to do that.

This could change the way other mobile operators advertise their plans.

straight talk

I’m hoping carriers will continue to offer the same sort of plans TracFone currently provides even if they’re advertised under different names. Odds are that truly unlimited data plans would cost substantially more than the current plans which offer around 1GB to 3GB of “high speed” data and unlimited bandwidth at lower speeds.

TracFone is a virtual mobile network operator (MVNO) that operates several wireless services including Straight Talk, Net10, Simple Mobile, and TelCel networks. These services piggyback on the T-Mobile and/or AT&T networks.

I’ve been a Straight Talk customer for a few years, and I pay about $50 per month for “ulimited” data, but I’m well aware that if I use more than 3GB within a billing period, my speeds will be slowed until the next month.

The problem is that customers hadn’t always been made aware that unlimited didn’t always mean, well… unlimited. The FTC’s ruling could lead TracFone and other carriers to use more clear language in the future.

Several years ago Straight Talk and other TracFone subsidiaries didn’t say anything about how much free high speed data you could use each month, and I only knew that the data wasn’t truly unlimited because of reports from other users. Starting in late 2013 the company did start to make some disclosures, but the FTC says they “were often not clear and conspicuous.”

These days you’re much more likely to find language that reads something like “30 day Unlimited Plans include 3 GB of high speed data per 30 day cycle” on the Straight Talk website.

Personally I’ve never had my speed throttled. But if you’re a customer with TracFone or one of its subsidiaries and you’ve had your speeds slowed down or your service terminated, you can file a claim for a refund at the FTC website.

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29 replies on “FTC fines TracFone $40 million for throttling “unlimited” data”

  1. HELL YEAH- I’ve been calling and complaining for last 2 years to At&T that they are throttling me. I was paying extra for the 20mbs down package and a report from my router would tell me that I wouldn’t even break 2mb’s downloading over a span of a year. Those gigantic A-HOLES- Well, senior management, not the peons…….

        1. It is true (that it exists), in the sense there is a federal program that helps provide poor people access to phone service, which many need in case of emergencies (their kid has a bad fall, etc.) or when applying for a job. That program was set up by, wait for it, Ronald Reagan in 1984. In 2008, under George W Bush, because cheap cell phones were now a thing, the program switched focus to those instead of landlines.

          Obama’s administration inherited the program and it continues to provide valuable communications assistance to needy families. So, no, definitely not a scam.

          As for the right-wing mythology about it — see here: https://www.snopes.com/politics/taxes/cellphone.asp

  2. Instead of imposing a fine where the money ends up in government’s hand to be wasted, I would like to see a refund to customers whose speed was actually throtled.

    1. Last paragraph of the article:
      “Personally I’ve never had my speed throttled. But if you’re a customer
      with TracFone or one of its subsidiaries and you’ve had your speeds
      slowed down or your service terminated, you can file a claim for a refund at the FTC website.”

      1. Hah! That will teach me to read articles to the very last word of the very last sentence.

  3. Should TracFone also be fined for not providing a clear, strong, fast signal at all times too?!?!?!? This is absolutely ridiculous.

  4. There is NO PROBLEM with carriers acting to provide everyone with the best service as possible. There is no trick here. TracFone states this limitation. They DO provide unlimited data; throttling is not denial of service.

    Defund the FTC.

    1. What about ‘terminating service when a customer uses too much data’? That seems quite different from throttling speed past some threshold.

      1. then they lose a customer permanently, and if they keep doing that, they will lose.

      2. You’re absolutely right, Terminating service is Very different than throttling. This would be a valid complaint / fine IF it only talked about termination.

    2. “The complaint states that there was no technical reason for TracFone to
      limit data, such as to reduce network congestion; rather, internal
      documents showed that the company’s data policies were created to
      “reduce the high costs associated” with providing the unlimited data
      that it had promised.”

      It certainly doesn’t sound like they were “acting to provide everyone with the best service possible”. Also, what about when they were turning off calls and text for some customers in addition to data. Is that “best service as possible” too?

      1. “‘reduc[ing] the high costs associated’ with providing the unlimited data
        that it had promised.” is still completely within their right. The FTC is trying to say just because something is footnoted in the fine print means it isn’t a valid part of the agreement. That is crap.

        1. No, it’s the typical crap that many companies try to get away with knowing that 99% (at least) of consumers never read the fine print of a user agreement before signing up. There is a reason why there are laws and regulations (e.g. for credit cards) requiring companies to be up-front with this type of information instead of burying it where nobody will find it.

          1. There’s a reason you should learn to read what your agreeing to. Take some responsibility.

          2. I agree that people need to take reasonable strps, but you are in denial of human nature. Corporations should not be allowed to exploit the trusting nature of most ordinary human beings in this way.

            If libertarians like you had their way, everyone would be completely snowed under with the fine print for every product and service they purchase, and there would be virtually no relation between the headline sales pitch and the actual terms of the contract. There would be no assurance that you were getting the advertised deal unless you spent hours investigating every last word. Imagine having to do this every time you want to buy a service or make a major purchasing decision. It would be torture. No thank you.

            Governments provide a valuable service to consumers by requiring companies to adhere to certain standards of behavior (like requiring cooling off periods). Not only is this common sense, but it reassures companies that are trying to do that right thing that they won’t be driven out of business by competitors who have fewer scruples than them.

    3. They used to lynch horse thieves and swindlers. At least the carriers get a hearing.
      More power to the FTC.

  5. Yay for Big Govt Control! If only we had net “neutrality” to bring equality to the masses!

  6. About time the FTC started cracking down on this deceptive
    practice, and force the carriers and MVNOs to explicitly state
    any throttling practices. (Interesting the FTC is doing this,
    the line between the FTC and FCC seems to be blurring
    nowadays.)

    I hope they go after FreedomPop as well, which is
    back to its old bad habits of “unintentionally”
    charging users for services they didn’t ask for.

    1. yes, FORCE! MANDATE! COMPEL! Its not the consumers responsibility to read the agreement, they should just get what they want or have Daddy Govt FORCE their way.

      Silly Sam, fascism is for the Eastern Bloc

      1. You’re being absurd. For several years Tracfone and its subsidiaries throttled without letting anyone know about it. It wasn’t in the agreement, they denied they were doing it, and it only came out that it was going on when tons of people made the same complaint at various internet forums. Tracfone was violating their user agreement.

        Furthermore — if you think this level of regulation (a $40 million fine on a $70 billion company for engaging in deceptive practices) is fascism, you have an extremely poor understanding of what real fascism is.

      2. Don’t be ridiculous In other democratic countries, consumer protection from deceptive business practices is not only an acceptable role for a government, it is expected of them. There is nothing fascistic or communistic about it. That’s what representing the people’s interests supposed to be about. We could do with more of it in the US.

          1. It’s more “is” and not “was.” Many people got throttled or got their account just plained cancelled without warning from Straight Talk for several years until they put some vague blurb on their site.

            Many complained to the FTC during those years when there wasn’t even any mention of the practice in the terms of service. Too bad the FTC took so long to do anything about it.

          2. Thats all well and good, but the FTC continues to pin blame on them for the time that the DID have it in their agreement. And for that reason alone I say the whole filing is flawed..

        1. Ya for many years Straight Talk didn’t mention anything about termination nor throttling after a certain amount of data. It was random too. Some got terminated after 2 GB and others after 5 GB. Being throttled or terminated was random.

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