TracFone To Refund $40 Million To Customers For Deceptive “Unlimited” Data Claims

This ad from 2012, cited in the FTC complaint, shows that TracFone did not even mention the possibility of data throttling in the fine print.

Beginning in 2009, TracFone began selling supposedly unlimited prepaid data plans for $45 under brands like Straight Talk, Net10, Simple Mobile, and Telcel America, but without clearly disclosing that users who went beyond certain monthly usage thresholds would have their data speeds throttled or cut off entirely. But today, in a settlement with the Federal Trade Commission, TracFone has agreed to refund $40 million to affected customers.

TracFone users who paid for one of these unlimited plans before Jan. 2015 and had their data throttled or cut off can now go to http://ift.tt/15IP4xv and file for a refund. Even those who are unsure of whether they may have experienced slowed-down data speeds may still apply for a refund to see if they are eligible.

According to the FTC complaint [PDF], TracFone “failed to disclose or adequately disclose its practice of enforcing fixed limits on the amount of mobile data service its customers could use in a thirty-day service period.”

The FTC says that for four years, most TracFone ads — and their products terms and conditions — failed to disclose that throttling may occur if customers surpassed a monthly data threshold. And even when the company began disclosing this information in Sept. 2013, the FTC alleges that it “tucked it away in small print” that was nowhere near the much more obvious statements about “unlimited” data.

This, alleges the complaint, is a violation of the FTC Act’s prohibition against deceptive marketing.

The proposed settlement [PDF] requires that TracFone remit the $40 million within five days of the entry of the order. The company may not seek the return of any of these funds.

The money paid by TracFone may be used to pay out settlements in private class action suits, like this one from 2013, filed over the company’s data throttling policy. However, none of that $40 million is to be used to cover other costs related to those settlements, including attorney fees, litigation expenses, court costs, or incentive payments to class representatives.