TracFone fined $40M for selling unlimited plans with clear limits

The Federal Trade Commission is putting mobile carriers on notice that if they advertise an unlimited plan they can’t monkey around with speeds — or at least must clearly disclose their throttling practices up front. After suing AT&T in October, the FTC has now come down on TracFone, the country’s largest virtual mobile operator, fining it $40 million.

TracFone is owned by Mexico-based multinational carrier [company]América Móvil[/company], and it operates as a mobile virtual network operator that buys minutes, texts and megabytes wholesale from the big four U.S. carriers. TracFone then resells those services under several names, including Straight Talk, Simple Mobile, Net 10 and Telcel America. Many of those brands have offered considerable deals to consumers, such as Straight Talk’s $45 plan, which offers unlimited voice and text along with what it claims is unlimited data. The problem was the company hasn’t exactly been upfront with its customers about the clear limits in those so-called unlimited plans.

For instance, in 2012 Straight Talk advertised unlimited data with no caveat when in reality it started warning and then cutting users off if they went over a 2 GB limit. Later it started slowing down the speeds of users after they crossed certain thresholds (in 2014, TracFone claimed throttling didn’t kick in until about 3 GBs), but it was still calling its data service unlimited As the FTC pointed out, it wasn’t exactly upfront with customers that their speeds could capped.

Though the FTC reached a settlement with TracFone, it apparently isn’t making it dump its use of the term “unlimited” in its advertising. Instead TracFone “must clearly and conspicuously disclose any limits on the speed or quantity of its data service.”

Customers who have been throttled under one of TracFone’s plans though are eligible for a refund. You can visit the FTC’s website to file a claim.

FCC launches its own probe into AT&T’s throttling practices

The Federal Communications Commission is investigating whether AT&T misled its customers over its throttling policies, which restrict network speeds on unlimited data customers after they’ve hit a certain threshold each month. The Federal Trade Commission also filed a lawsuit against AT&T over the practice in October, but of the two agencies, it seems Ma Bell would prefer that the FCC do the investigating.

[company]AT&T[/company] disclosed the FCC probe in a motion to the dismiss the FTC’s lawsuit (first spotted by Ars Technica). AT&T argued that it’s not subject to the FTC’s jurisdiction because of its “common carrier” status as a regulated phone service provider. That jurisdiction lies with the FCC, which has launched its own investigation, AT&T claimed.

“The FTC seeks to litigate the very same issues in an inappropriate parallel proceeding,” AT&T said in the motion to dismiss file this week.

But how safe AT&T would be under the FCC’s eye remains to be seen. FCC Chairman Tom Wheeler has come down hard on the carriers over their throttling practices. And AT&T may be taking a risk by arguing its common carrier status. Currently, mobile broadband isn’t considered a common carrier service the same way regular telephone networks are considered utilities, but the Obama administration wants data services to be reclassified to make the internet neutral ground for all web services. Wheeler has said he will bring a net neutrality proposal to a vote on February 26.