AT&T to pay $60M to settle claims it throttled data

AT&T has agreed to pay $60 million to resolve allegations that it charged millions of customers for “unlimited” data plans while significantly reducing their data speeds if they used too much, the Federal Trade Commission announced Tuesday.

In 2011, the carrier began “throttling” — slowing speeds to the point that web browsing and other routine actions became difficult or nearly impossible — customers with unlimited data plans, the FTC alleged. By October 2014, more than 3.5 million customers had been affected, according to an FTC complaint.

“AT&T promised unlimited data — without qualification — and failed to deliver on that promise,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a news release. “While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised.”

Under the settlement, which resolves a 2014 FTC lawsuit,

AT&T is barred from “making any representation about the speed or amount of its mobile data, including that it is ‘unlimited,’ ” without prominently disclosing relevant restrictions, according to an FTC news release. Hidden hyperlinks or fine print will not suffice, the agency said.

The $60 million will be put toward partial refunds for affected customers. Consumers will not have to submit a claim to receive a refund; current customers will receive a credit on their bills, and former customers will receive checks for what they are owed.

“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 a statement emailed to the Washington Post.

AT&T tried to fend off the FTC in court for years, saying the agency didn’t have jurisdiction over the case. A long legal battle ensued, but an appeals court judge sided with the FTC in 2018.

The Federal Communications Commission fined AT&T 100 million in 2015 over similar allegations. The FCC said that it received thousands of complaints from customers about throttled data speeds, and that the agency’s investigation found that customers saw slowed service for 12 days per billing cycle.

“The AT&T throttling scandal is an important case study into how dominant firms operating without meaningful competition can easily renege on their contractual obligations and cheat consumers who have almost no recourse,” FTC Commissioner Rohit Chopra said in a statement Tuesday.