FTC sues AT&T for allegedly misleading 'unlimited' data plan customers, throttling speeds by up to 90%

The US Federal Trade Commission (FTC) today announced it is suing AT&T. The commission is charging the carrier for allegedly misleading millions of its smartphone customers by changing the terms while customers were still under contract for “unlimited” data plans that were, well, limited.

“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.”

In a federal court complaint filing, the FTC says AT&T reduced the data speeds on “unlimited” accounts. The carrier did so by 80 to 90 percent for affected users, according to documents filed in the U.S. District Court for the Northern District of California.

The complaint alleges the company violated the FTC Act by failing to adequately disclose to its customers that if they reach a certain amount of data used (sometimes as little as 2GB) in a given billing cycle, AT&T will throttle their connection. In fact, FTC says data speeds were reduced “to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video – become difficult or nearly impossible to use.”

Even as unlimited plan consumers renewed their contracts, the company still failed to inform them of the throttling program. When customers canceled their contracts after being throttled, AT&T charged them early termination fees typically amounting to hundreds of dollars.

The FTC says AT&T began reducing data speeds in 2011 for its unlimited data plan customers. Although the carrier no longer offers unlimited data plans, the FTC estimates AT&T throttled at least 3.5 million unique customers a total of more than 25 million times.

The FTC only files complaints when it has “reason to believe” that the law has been or is being violated, and a proceeding is in the public interest. This is why we have “allegedly” in the headline above: The case still needs to be decided by the court.