TracFone is a popular cell phone service provider that offers pre-paid options for talk, text and web browsing. Back in 2013 they began offering unlimited plans where for a set monthly fee you could talk, text and browse the web as much as you wanted for one price, without any type of contract. The popular plan was well received, until TracFone began throttling the data once people hit a specific threshold. In some cases, they even suspended customer’s connections.
For those not familiar, throttling data simply means that they limit the speeds at which you are able to download data. For customers who use this data for watching movies or streaming music, this throttling makes it virtually impossible to use the service. Even for those who just like to browse the internet, the pages begin to load so slowly that it will remind them of dial up connections from the mid 1990’s.
The FTC began looking into this situation, and found that it violated section 5 of the FTC act. This section covers unfair and deceptive trade practices.
According to the law firm Kelley Drye & Warren LLP, TracFone has settled the lawsuit for $40 million in restitution, which will be distributed to the affected customers. I have not been able to find exactly how many people were impacted, but in cases like this the customers usually end up getting a small check.
In addition to the $40 million settlement, TraFone has agreed to following these terms:
- One year after the entry of the order, they must submit a compliance report. The report must detail the company’s products, services and show how they are remaining in compliance with the settlement.
- This report must be filed annually for the next ten years.
- TracFone has to create and retain specific accounting and personnel records.
- Within 14 days of receipt, TracFone must comply with any written requests from the FTC for things like document production, deposition appearance and more.
This is an especially significant settlement right now because of how much debate is going on regarding net neutrality, which touches heavily on internet throttling. In fact, if the FCC approves the recently proposed open Internet rules, this case would be handled by the FCC rather than the FTC in the future.
You can read more about this specific case on the law firm’s website, HERE.
