TracFone to return $40 million

The Federal Trade Commission released information January 28, 2015, regarding the recent settlement with TracFone Wireless, who will return $40 million to consumers.

Since 2009, TracFone has advertised unlimited service using a variety of brand names, including Straight Talk Wireless, Net10 Wireless, Simple Mobile, and Telcel America.

The centerpiece of TracFone’s ad campaigns was “unlimited talk, text, and data” – sometimes described as “unlimited everything” – for about $45 per month.

TracFone broke the “unlimited data” promise it made to millions of consumers, says the FTC, by substantially reducing the speed of their service if customers went over certain fixed limits in a 30-day period. Throttled customers often experienced slow-downs of at least 60 percent and sometimes even 90 percent. Furthermore, the policy had nothing to do with network management and everything to do with an internal TracFone business decision “to control excessive data usage and reduce the high costs related to it.”

The complaint charges that TracFone violated the FTC Act by advertising unlimited mobile data service while failing to disclose – or failing to adequately disclose – that it imposed material restrictions on the quantity and speed of data for customers who used more than a fixed amount in a given service period.

The settlement requires TracFone to clearly and conspicuously disclose any limits on the speed or quantity of its data service. In addition, the settlement establishes a $40 million fund for customers whose service was affected.