TracFone’s limits on “unlimited” data lead to $40 million in consumer refunds

Certain advertising terms are bound to attract consumer attention: “free,” “no diet or exercise required” – and for people in the market for mobile data plans, “unlimited.” The FTC’s settlement with TracFone Wireless will return $40 million to consumers whose unlimited service was throttled or cut off. What can your company take from the case?

TracFone is the country’s largest prepaid mobile phone service provider with approximately 25 million subscribers. Since 2009, TracFone has advertised unlimited service using a variety of brand names, including Straight Talk Wireless, Net10 Wireless, Simple Mobile, and Telcel America. The centerpiece of TracFone’s ad campaigns was “unlimited talk, text, and data” – sometimes described as “unlimited everything” – for about $45 per month. Sure, phone and text services were attractive selling points. But consumers were particularly drawn to unlimited data plans so they could surf the web, stream videos, and use mobile apps without worrying about how much data they used.

According to the FTC, TracFone broke the “unlimited data” promise it made to millions of consumers by substantially reduced the speed of their service if customers went over certain fixed limits in a 30-day period. Throttled customers often experienced slow-downs of at least 60% and sometimes even 90%, significantly impairing their ability to engage in the very activities people buy a data plan for. Customers whose service was cut off couldn’t send or receive mobile data at all.

Once people began to approach the company's fixed data limits, TracFone would send them a prerecorded voice message. Rather than describing the company’s data throttling policy, the message just said something like this: “If your excessive data use continues, we may need to suspend or deactivate your data service or terminate your phone service altogether as specified in the terms and conditions of service. . . . ”  But according to the FTC, even TracFone’s terms and conditions often didn’t disclose how it limited customers’ data service.

What’s more, the FTC says that until at least September 2013, most TracFone’s ads didn’t explain the throttling policy at all. After that, TracFone started to disclose some information, but not in a way that was clear and conspicuous to consumers. For example, the FTC alleges that TracFone buried it in fine print away from the much more prominent promise of unlimited data or put in on the back of packages where people were less likely to look.

Did TracFone’s policy apply just to a tiny percentage of particularly data-hungry customers? No. According to the FTC, TracFone throttled the mobile data service of millions of customers and suspended the service of hundreds of thousands more. Furthermore, the policy had nothing to do with network management and everything to do with an internal TracFone business decision “to control excessive data usage and reduce the high costs related to it.”

The complaint charges that TracFone violated the FTC Act by advertising unlimited mobile data service while failing to disclose – or failing to adequately disclose – that it imposed material restrictions on the quantity and speed of data for customers who used more than a fixed amount in a given service period.

The settlement requires TracFone to clearly and conspicuously disclose any limits on the speed or quantity of its data service. In addition, the settlement establishes a $40 million fund for customers whose service was affected. Consumers can get more information about the refund program at ftc.gov/prepaidphone.

What can other companies take from the TracFone settlement?

  • Mobile products and services may be new(ish), but there’s nothing new about the truth-in-advertising principles that apply. And one of those central tenets is that the FTC looks at representations from the consumer’s perspective. That’s why – to use an obvious example – it’s unwise to make the express claim that a service is unlimited if what you really mean by “unlimited” is, well, “limited.”
  • We’ll keep saying it as long as we have to: If the disclosure of information is necessary to prevent an ad from being deceptive, the disclosure must be clear and conspicuous. If you advertise a service as unlimited, don’t bury key restrictions in blocks of fine print placed where consumers aren’t likely to see them. What principles should companies consider in their approach to disclosures? The FTC staff guide, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, is a good place to start. (Do you advertise on TV or in print? It's still worth a read.)
  • Like some other recent cases, the TracFone refund program will be coordinated with a pending class action. Of course, that case is separate from the FTC's law enforcement action, but when it’s in consumers’ interest to have refunds administered that way, we’ll work with all parties to streamline the process.

Comments

VIRGIN MOBILE dose the same thing go them them to

While it is true Virgin Mobile does limit speeds after 2.5GB on it's $35 Monthly plan and 3GB on it's $50, they have made it pretty clear on their website and send out texts when you reach about 85% of the threshold. The issue with TracFone and AT&T is most likely that they did not disclose the fact that they throttled the data after a point.

This has been going on for quit sometime I knew they hAd to be doing something. Its unfair we spend money and its suppose to be unlimited and it not slows down tells u that u have insufficient space to download. Can't text message at times etc . Its wrong!!!d

This is fantastic. Now, if the FTC, FCC, and others would acknowledge that data caps NEVER have anything to do with network or bandwidth management and are ALWAYS about extracting money from consumers without regard to actual network capacity, and start prohibiting that practice altogether as inherently deceptive, this would never be a problem anywhere.

I have read several accounts of this criminal activity. I have seen nothing in regard to someone being prosecuted and I have seen no reference to Walmart who sells straight talk devices. Hardly the only fraudulent activity Walmart is in involved in. When are we going to start jailing these corporate criminals?

I knew that since long time ago. Its really good about this claim. At least I will receive refund for many times I wasted my money with them. Its a SCAM!

I have used this plan for some time now, while using the phone would not work for data at all--- even sometimes my calls would drop or service get cut off before the 30 days. I'm looking forward to this plan in the near future since I was not familiar with bringing a class-action lawsuit for this. Sometimes us buyers claim well they got so many customers and by the time they look into it IT'S not going distribute the money to you soon at all. But right now I have other issues to state that the friendly customer service people were all foreign speaking people. I could barely understand them whenever I needed to call customer service for tracfone wireless UNLIMITED STRAIGHT TALK 45$ plans.......... I look forward to being compensated for my loss.

I encountered problems with tracfone when my regular cell phone was down and I was a bit disturbed about it but had to live with it due to the circumstances I was in.

Its sad when consumers dont get what they pay for. 45 dollars is a lot each month especially me and the hubby had straight talk been with them for 3 years almost 4. I deserve all my money back but if course it not gone happen but getting something back, despite all the money we put into the company with upgrading the phones with them. THIEVES

These companies prey upon people with poor or no credit, or those who just do not have a lot to spend on phone service.

Right now, I'm dealing with Net10 on another issue: I was auto-enrolled and supposed to pay less; however, they have continued to charge me the regular price month after month. When I call, I get the run around. I have filed an FCC complaint, but it appears I need to file an FTC complaint. I unenrolled from their service and now they deny that I ever had the "auto-refill" service. I can't access my account summary or payment history on their website, because - they want to keep you in the dark.

So, I'm not certain that Tracfone will be honest about which customers with the "unlimited plans" got "throttled."

In reality, all of these company execs need to go to jail for trying to screw the little guy, your grandmother, people who are generally the working poor. And these scum get bonuses for finding new ways to cheat you out of your money.

I have been calling and calling regarding this issue and every time I get technical support in Phillipines who tell me I have gone over my 3 Gb limit that should be unlimited talk and text. I no sooner renew my monthly plan 45$. And within a week I have slowed and not able to utilize or engage in any data use. It takes long long time to do anything. This is horrible and I have been dealing with it for over past year.

Its screwed up

How much money do you guys think we will get refunded because i got involved in a lawsuit with Apple and only 18 cents refunded! So after all the money I've spent on straight talk!! I betted get some money refunded!!

Have used straittalk unlimited for around 5 yes ,have been upset a lot can't get on my face book or google half the time loose phone calls get flustered have to Waite 10 or even 15 min to call or get to call.

Have used straittalk unlimited for around 5 yes ,have been upset a lot can't get on my face book or google half the time loose phone calls get flustered have to Waite 10 or even 15 min to call or get to call.

Been using straightalk for 5 yrs. it could be faster than it is seems it's getting slower not very happy.

I'm not satisfied with this service as I was before it seems as it gets slower each time I try to get on it sometimes I can't even get connected to Internet or Google you got to make this better Ty

I have contacted the BBB several times. Straight talk would never come to an agreement with me. All I asked was that they stop slowing my data speed down. The very first month I had my service, I used my data a lot while watching Netflix. I assumed I had "unlimited" data....man was I wrong. 3 days after paying my $45 fee, my internet wouldn't work. My iPhone keeps track of my data usage and I used 2.5 gigs of data...and I was then capped by ST. After calling and complaining about my slow service, I was told that there is a "secret" list called "HIGH DATA USER LIST." This customer service rep wasn't suppose to tell me this. Of course ST denies that this list exists. Since month 1, when I first went over my data and was placed on the list, my service has never been the same. That is why I filed a complaint with the BBB. ST keeps telling me to just buy a refill card and add more data....why should I??? I just paid for 30 days and only got 3 days of service! So they expect me to add data every few days?! ALSO, after being placed on the "LIST" I now get capped at 1.5 gigs in order to prevent me from using too much data. ST told the BBB "It is what it is and we can't do anything about it." They claim they have no control over capping people....it's a tower or something that controls the data throttle cap. So now, I only use my iPhone with wifi. I would love to get a new provider but financially my wife and I can't afford a 2 year contract at $200+ per month. So I must deal with the bad service and customer service reps. I have never dealt with such poor customer service in my life! Please stop outsourcing....I can't understand a thing the customer service reps say!

You should come to sprintm unlimited talk /text/and internet 4g spark which is fast as att for 60.00/month, 67 with tax. No contract.

Keep getting cut off , my grand mother is diabled and need to be able to get hold of her any time of the day . It stresses me when i cant get her because the call drops the call just as she ansers. And it takes me 15 or more mim just to get her back. It could be an emergence . Its already stressful to me.

At walk mart I couldn't get s call out and I asked for management to tell him you could not call from a way mart store with the track phone he said really. Lol yes I said and he tried to make a call on the tracphone. Didn't work!!! Any do they tell me now on my smart seven days before a reup card is due and the cut me off?? Have to buy one eari!er that. My contract. Not fair

Straight talk throttles everybody back at 1.5 GB they owe all customers big money and free service with no data limits or caps

I've been dealing with the same issues that everyone is mentioning here. I renewed my service tonight and I can't even watch a YouTube video. It's throttled right from the begining now. And this is after the lawsuit is won!!!! It just shows that it isn't going to stop

For over a year I PAID for UNLIMITED Data with NET10 Tracfone. Never once did I receive the Service. I was sent a wrong web address by text to obtain a refund from a Class Action Lawsuit AFTER the LAST FILING DATE requirement. Go figure, now it is over & the "Court" decided to let NET10 investigate their info on us/our accounts to tally up our/your refunds?? I was notified after the fact!! Real Legal Help?? 40 Million $ Refund?? Lawyers get at least 1/3 & if NET10 screwed over at least 25 million customers you guys who managed to get in on the lawsuit might get $1.00. Sickening!! Mandatory Repayment to Customers should be a 95% repayment of EACH MONTH'S ACTUAL COST!! I had so many problems that I felt forced to change my # 1 week ago & guess what??!! I know they must have my "phone" on some kind of "High Data User" List. I was "Pleasured" by having to Call them 4 times to actually find a technician who Could Actually Turn On My High Speed Data Connection 1 week after THEY GOT PAID!! I only got to use the high speed data for 3.8 GB & I am allowed 5GB @ high speed with the new law, but they turned off the high speed @ 3.8GB?? I called them this morning to let them know & they said I had used 5.3 GB?? AND would do nothing so this IS MY LAST MONTH with NET10. IF WE ALL STOP Supporting these LYING, GREEDY CORPORATIONS it may start affecting their children's Tuition Payments to Harvard University & their parking priviledges for their yachts on the French Riviera, not to mention their $500 lunches for the "crust removed" cucumber sandwiches with foie grass designed plates that you & I can make with 2 slices of bread & a 1/4 of a cucumber for 50 cents or less!! People like them ARE What's WRONG with the world. They DO NOT KNOW how to Survive without living off of us as the Parasites they are. AND they wish us to be gone with their DePopulation Agenda?? Just how will they survive?? Really?? They all have this screw over attitude. Well there IS ONE They ALL WILL have to have an ACCURATE Acounting to & He's On His Way sooner than most think. Thou Shalt Not Lie. Thou Shalt Not Steal. Love Thy Neighbor & DO NOT COVET Thy Neighbor's Possessions = Our Money!! Simple & ANY Infraction Shall Be Dealt With. Simple. Justice Will Come. Simple.

Same problem. I bought a 90 day service card for 145 dollars. Within 30 days my speed was slowed down even though according to my device I had not used half of my data.
I do not want my money back, just want the government to make them tell the truth about unlimited data.
As far as I am concerned they just flat out lie and get by with it.

yea they said nothing about it stopping or changing.. they will still throttle people but now they advertise it.. lol go figure.. ST actually gave my number and account away months ago while it was still in service. i just bought a refill card a week prior.. they claimed im a liar and thats never happened.. my security questions were changed and also the new customer with my account was Spanish.. they claimed i got a new phone earlier that day and called to transfer numbers. obvi they got the accounts mixed up an never went good.. im still locked on out line.. i had that number for almost 7 years my mom n dad were also on my online account.. its all gone.. no refund.. they still dont believe me.

Are we eligible to apply for this if Straight Talk is still our current provider?

I find it hard to believe anyone here is a victim to anything other than their own gullibility. I've been using ST for over 4 years now. As far back as I can remember the cap has been advertised. Yes, it was in the fine print, but it was there and tied to the main advertisement by an asterisk (*). Also it was spelled out in the terms of service that everyone attests to reading when they enroll in the service plan.

I use the service because it works for me. If you need a truly unlimited service, then you may need to look at another (aka expensive) plan. Don't blame the service provider because you failed to understand what was being provided before you paid.

Getting dropped calls? You've got another problem. This is about unlimited data being limited to a measly 3GB. Then having your name put on a computer list that halves your speeds when you do get data back. And limited to 64kbps when throttled after 3GB. Not only do they throttle you, but then your data connection disconnects and reconnects to further stop you from using data.

$40 million is NOTHING to Tracfone. Not even a drop in the bucket. People will only receive pennies back. And here they are, still advising with the word unlimited.

I don't want to be compensated with a fraction of a percent of what I've spent. I want phone companies to do what's right and stop monopolizing data.

I've been 28th ST for 4 years. Yes I have exsperiance all the set backs. I aplied for the law suite refund. Out of the$40 million....I received $15.11.

They sent my son exactly $15.11 today without him even knowing about it!! I'm pretty sure he got ripped off for quite a bit more!!smdh.

Yes I believe you have to be a current / past customer. A customer during the period of 2009-present gives you the option to file a claim. I had a feeling the UNLIMITED DATA had a limitation which is why i always cautioned on USING lots of data by trying to use WiFi whenever possible. I hope I can get some money out of the false claim of Unlimited that was really Limited via Data. Liars and Cheaters of business things should always be handled like this because the truth needs to be known and if they lie they should pay for it.

I HAVE BEEN UNHAPPY WITH STRAIGHT TALK SINCE BEING WITH THEM 18 MONTHS... ESPECIALLY WHEN YOU HAVE AN ISSUE AND YOU GET THE PHILLIPINES AND CANNOT UNDERSTAND THEM!!!

I cannot stand their Straight Talk service. Unlimited should mean unlimited at the higher speed. They're deceptive, and their customer service is nonexistent. Slowdown of speed for any reason is abhorred. I haven't heard back from parent company ERD Management, except a non responsive auto reply. $45.00 per month plan is what I bought.

I wont be happy until Tracfone Wireless Inc (Straight Talk) and Walmart are prosecuted with criminal charges and both businesses are shut down completely and thrown in jail. They shouldnt be allowed to do business at all.These businesses are running and using money that has been stolen from consumers. Plus Tracfone Wireless Inc(Straight Talk) now throttles and cuts off your data usage right after you buy a $45.00 unlimited service and they dont wait for you to reach your so called data limit so beware and use their service at your own risk. I was even threatened by teresita at Tracfone Wireless Inc, Stating that if I ever make another FCC complaint that my service would be terminated. Whatever. I made more complaints.

I ran a sales corporation which required me to live on the road and do all business on my phone. Well unbeknownst to me, my calls were getting dropped due to data restrictions and also couldn't access important company emails due to the deceptive and evil practices of straight talk. I eventually lost customers and finally my business closed due to this blatant lie about "unlimited" service! All this caused my to lose my home in Malibu due to lack of income. My wife then left me and now I sit here writing this on an welfare phone while sitting in the van I live in behind the local landfill. Thanks for single handedly destroying me straight talk.

I've been with this company for Two Years and since my first month I recieved text messages stating I used up all my data for the service period and my data will be slow for the remainder of the service period. I find this to be a scam and unfair to all of the people that do business with this company. I feel like they should not only PAY each consumer for the time they been with them but they should also be punished for LYING AND CHEATING US. THEY REALLY NEED TO BE STOPPED.

I got straight talk in 2013 and paid for the whole year at once. I used it for streaming Netflix when I was in the car line picking up my kids and got throttled down 2 weeks into the year. Called and was told that at the end of my billing cycle it would go back up. My billing cycle was a year long so I went pretty much a year with throttled down Internet. I couldn't even pull pu Facebook!!! Went month to month after that and am still throttled down 2 weeks into my month every month. As soon as I can I am switching to Walmarts family Mobile service and spend $35 and get 2.5 gigs then can buy a $10 card to get 1.5 more as needed. At least this way I will have all the 4g data I need instead of 3G on my iPhone.

I'm tired paying for service and not getting it. I can't get the data that I'm paying for.

Does anybody know anything about the settlement on straight talk. They gave me a claim # and never heard back from anybody

When do we get our money we should not have to wait to long that's not right the custermer should come first

Well i had straight talk and it never worked. Then i went boost and they are worst my service is throttle in two weeks of service my phone just freeze and stop working

I wouldn't mind Straight Talk's throttling if their advertised speeds were accurate, but they're not even close. "High speed" typically was 256kbps. After throttling, I usually experienced 5-7 kbps, virtually useless. I complained but got only menu boilerplate from "customer service." Will never use Straight Talk again. I guess the $40 million suit didn't result in correcting false advertising.

We switched to Tracphone about a year ago and got our first smart phones. We pay as we go and have a ton of texting and internet minutes we haven't used. I think really at this point the need for mobile internet is over rated since the service is not so great and the costs are high. We have problems getting our calls too and it is not because of the number of bars showing. All sorts of games at play with these companies. They are very sleazy. I am seriously thinking about just going back to regular phones. Just plan ahead about where we need to go and avoid the need for any navigation like we did for almost 60 yrs. Use a Thomas Map book instead. If I want to go online I can do that from home with much less hassle. The size of these phones, the crappy interfaces they have I just think it is way over rated for what you get. Plus we have to deal with Google's constant wanting to add tons of app updates for apps we don't use. I feel like the whole industry just push push pushes us to buy into this crappy excuse for mobile internet. I think if more folks just said Enough Is Enough to the industry they would change their tune. It is way over priced and we pay the most compared to much small nations with slower speeds too! We are the biggest chumps for these companies and not much critical thinking takes place with any of this. Whatever the market can bare and we bare a whole lot. How can anyone justify paying over 200.00 a month for these phones? I gave up on the FCC actually doing anything for consumers. The game is rigged with the head of FCC being sider, to the White House looking the other way on all this because the NSA issues and the collusion with big telecom and NSA. Even now the cat is out of the bad with NSA still the White House tip toes around telecom issues. Not a darn thing has improved. So it makes you wonder what the telecom companies have on the NSA and others? Must be big and bad. I lived without a smart phone for almost 60 yrs and got along fine. I think folks need to reassess what is a need and get rid of the over priced wants and this is the only way these companies will feel it. No regulatory agency will do it for us. To know where the FCC priorities lie all you have to do is search the lawsuits on this site and realize the FCC is much too busy taking down the small guys and letting he bigger entities a big fat old pass on so much. No wonder Tracfone makes a big deal about how you can't transfer your smart phone minutes to a plain old phone if you don't like the smart phone since they really want to discourage you from leaving their big money maker from smart phones. The irony with Tracfone is if you ever have to call them about an issue you end up on their crappy computer phone lines to the Philippines or elsewhere and you can barely make out what the customer service rep is saying. A phone company who doesn't understand the importance of using good phone lines instead of cheap crappy internet service. The FCC does NOTHING, NADDA..ZIPPO. Time to retire someplace else, the corporate welfare is getting too heavy for the 99% to hold up anymore.

Well said. When my current 30 days with net10 are gone...so am!

I had straight talk for nearly 3 years I always knew something was wrong bc my speed slowed down after the first 3 days I urchased a Samsung gallexy 3 with a 45 card the added a 130 card too keep me going for at least 4 months,the phone alone was 299.99,,, I hope we get everything WE PAID too those crooks,,,, I did read where checks will start too be disburse on October 20th 2015 but it didn't give a calculation of how much each person that put a claim in. It did however say layers were entitled to 5million in legal fees which will come out of the 40 million pay out too those who filed a claim.

Has anybody, did anybody or do you know of anybody who actually receive any compensation of any kind from this consumer fraud case? Most every person that I know uses Straight Talk, not one person did or knows of any one who was compensated in any was from this case. No communication what so ever.
It leads me to believe that due to many people do not register their cell phone, was this one way of tracking people for statics?
I'm sure that the "general population" is not going to see a penny of that $40 million. After the lawyers and government are finished there will be nothing left except for all of our information that we provided to be sold to the highest bidder.
Please if anyone out there has received any correspondence please reply.
Thank you
Jackie

I have bring your own phone with Straight Talk. One for myself & one for my mom. Her phone is supposed to have internet on hers so we pay $45 for hers & mine. The $45 plan I hafta get for her will not connect to the internet but they won't allow me to purchase the $30 plan for her. She is 74 years young & all she uses it for is to make & receive calls. She does not txt & cannot get pictures of her great-grandkids. $45 is a crappy price for so little use. I have the $45 plan & my everything gets slower & slower for less & less use. I always add my refill card a few days ahead of time & this time I only got 11 days b4 they txt & said I was being slowed down.I am disabled & dropped one company bcuz they were charging me more than the agreed upon price. With extra taxes & surcharges they were eating me alive!!! The lady I spoke with this evening told me that I needed to turn my phone off bcuz it still eats all kinds of data while still turned on! How in the bloody hell am I supposed to get a call if I am sposed to turn it off all the time? I could complain for a very long time but since I started using Straight Talk after the cut off & only found out about the refunds tonite I am pretty much done for. Still I feel a bit better since I got some off my chest. Thanx!

I paid 50.a month

I applied for a refund before the deadline now what happens.

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