AT&T has misled millions of its mobile customers by promising unlimited data plans, then charging them and reducing their data speeds after they reach a monthly cap, the U.S. Federal Trade Commission said in a complaint announced Tuesday.
Some AT&T mobile customers had their data speeds reduced by nearly 90 percent after reaching a monthly data cap, the FTC said.
The company failed to adequately disclose to customers on "unlimited" data plans that it would reduce speeds after they reach the monthly cap, the FTC said in a news release. AT&T reduced data speeds to the point that many common mobile phone applications, including Web browsing, GPS navigation and streaming video, became difficult or nearly impossible, the agency alleged.
"AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," FTC Chairwoman Edith Ramirez said in a statement. "The issue here is simple: 'Unlimited' means unlimited."
AT&T representatives weren't immediately available for comment on the FTC complaint, filed in U.S. District Court for the Northern District of California in San Francisco.
AT&T began throttling data speeds in 2011 for unlimited plan customers, after they used as little as 2GB of data in a billing period, the FTC alleged. Since then, AT&T has throttled the data speeds of about 3.5 million mobile customers, the agency said.
AT&T's marketing materials emphasized that an unlimited amount of data that would be available to consumers on those plans, the FTC alleged. But even when unlimited plan customers renewed their contracts, the company failed to inform them of its data throttling program, the agency said.
Then, when customers cancelled their contracts after having their data throttled, AT&T charged them early termination fees, the FTC said.
The FTC's complaint charges that AT&T violated U.S. consumer protection law by changing the terms of customers' unlimited data plans while those customers were still under contract, and by failing to adequately disclose the nature of the throttling program to consumers who renewed their unlimited data plans.
Sign up for CIO Asia eNewsletters.