Phone company settles for $40M over 'unlimited' data claims

The prepaid mobile phone company TracFone is agreeing to pay $40 million to settle allegations that it deceived customers with ads offering unlimited data use. 

The company, described as the largest prepaid mobile phone provider, settled with the Federal Trade Commission on Wednesday. The company is also barred from running similar ads in the future. 

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The FTC has another case pending against AT&T for comparable allegations. 

The company sold monthly subscriptions for data plans through a number of brands including Straight Talk, Net10, Simple Mobile and Telcel America. The plans that cost about $45 a month promised unlimited data, which allowed customers to surf the Internet, check email and stream video, among other things.  

Advertisements for the plans regularly ran on TV, radio and print.

The FTC alleged that the company regularly throttled customers’ data when they used between 1 and 3 gigabytes. The FTC alleged that the company regularly cut off service after 4 or 5 gigabytes were used. 

The FTC found no reason for the throttling other than to save money. 

The company did begin disclosing the fine print of its unlimited plan after 2013 and regularly called customers about excessive data use. But the FTC said the disclosures were hard to find and the phone calls did not disclose specific data limits.  

The $40 million will be used to settle a number of lawsuits against the company. The FTC asked anyone who had purchased a phone plan before this year to contact the agency to ask for a refund.