AT&T To Cough Up $60 Million To FTC For Refunding Users Harmed By Misleading Marketing

Ramish Zafar

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Carrier AT&T came into the spotlight last month when users were unable to access their voicemails for 24 days straight. AT&T's proposed solutions infuriated customers as it meant that they would have to lose all stored voicemails in order to gain access back. Now, the company is paying $60 million to the Federal Trade Commission in response to claims of a misleading sales pitch. Take a look below for more details.

AT&T Will Pay $60 Million To FTC For Misleading Customers Regarding Unlimited Data Plans

The Federal Trade Commission sued AT&T (NASDAQ:T) in 2014 when the body claimed that the carrier had throttled download speeds of carrier plans it had advertised as 'Unlimited'. AT&T's throttling affected up to 3.5 million subscribers at the time, with users having had their speeds slowed down more than 25 million times. AT&T at the time claimed innocence and stated that the throttling affected only 3% of its customers and that customers were notified before their data speeds were reduced.

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Now, the trade commission has announced that AT&T (NASDAQ:T )will pay it a sum of $60 million as a fine for the malpractice. This will be deposited in a fund to provide partial refunds for users who had signed up for the carrier's unlimited data plans before 2011 and had their speeds throttled.

Not only does the settlement require AT&T to cough up the $60 million, but the carrier is also barred from marketing any plans as 'Unlimited' without clearly stating any restrictions on data or speeds. AT&T had started to throttle users' speeds when they had used as little as 2 gigabytes of data in one month. In a statement emailed to Reuters, AT&T states:

“Even though it has been years since we applied this network management tool in the way described by the FTC, we believe this is in the best interests of consumers.”

The Commission had fined AT&T (NASDAQ:T) $100 million in 2015 for the same allegations. At the time, FTC revealed that affected customers had received the throttled service for up to 12 days out of a month. The fine was the largest proposed amount in the FTC's history at the time, and the body claimed that AT&T did not adequately inform users of the carrier's throttling caps.

"While it seems obvious, it bears repeating that Internet providers must tell people about any restrictions on the speed or amount of data promised," says Andrew Smith, director of FTC's Bureau of Consumer Protection.

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