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Defining Unlimited: US Government Cracks Down on Deceptive Carrier Practices

Defining Unlimited: US Government Cracks Down on Deceptive Carrier Practices

What These New FCC and FTC Lawsuits Could Mean for the Industry – And For Users

December 3, 2014

The days of deceptive wireless charges may be at an end – within recent months, the U.S. government has begun coming down hard on carriers.

In a concerted effort to focus on carrier billing practices going forward, the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) have officially slapped no less than 4 lawsuits on the largest U.S. carriers in 2014.

According to the FTC, AT&T, T-Mobile and Verizon have allegedly been taking advantage of their customers with deceptive billing practices, such as by falsely labeling services as “unlimited.”


The U.S. Government vs. Carriers


Last month, AT&T agreed to pay a $105 million penalty – the largest enforcement action ever of its kind – in response to an investigation that discovered customers were being charged for millions of dollars in unauthorized third-party subscriptions and premium text messaging services (see Mobile Cramming: What is it and Who is Affected?).

Now, the carrier is under fire from the FTC, facing allegations that it misled customers with legacy unlimited data plans by throttling data speeds and altering service terms after customers had already subscribed. In some cases, according to the FTC, AT&T slowed some data speeds by nearly 90 percent.*

Thus far, AT&T is denying the charges, arguing that it was merely “manag[ing] its network resources to provide the best possible service to all customers…like all major wireless providers.”*


Like AT&T, the “UnCarrier” was also charged in a mobile cramming lawsuit alleging that T-Mobile swindled customers out of hundreds of millions of dollars by knowingly charging for “premium” text messaging subscriptions.

In many cases, these texting services were false charges that had never been authorized by the subscribers – nor did they know they were being charged.


Also last month, no. 1 U.S. carrier Verizon agreed to settle a $64.2 million class-action lawsuit alleging that the carrier over-charged customers on its Family Share Plan (for example, though the plan allowed subscribers to share minutes and place free calls to one another, Verizon would allegedly charge customers for “in-network” minutes or for additional phones on the plan exceeding an allotted one-minute allowance).

This includes $36.7 million into a fund to be distributed as cash or phone bill credits to affected customers. The deal also calls for Verizon to give customers who were charged for “in-network” minutes PIN numbers for domestic or international calls, an arrangement valued at $27.5 million.†


Looking Ahead: Defining “Unlimited”

Specifics aside, AT&T’s aforementioned statement that “all major wireless providers” participate in activities like throttling is a statement that rings true, to varying degrees.

In the case of data throttling, the problem remains: What does “unlimited” really mean when it comes to data?

Experts believe that through these lawsuits, regulators are trying to set a precedent for how information is delivered to customers in the wireless industry as a whole.

In addition, they also may be trying to send a message – that “unlimited” should truly mean unlimited. And that, if carriers charge customers for unlimited data without delivering, there will be consequences.


* Kline, Daniel. The FTC Calls Bluff on AT&T’s Seemingly “Unlimited” Data Plan, The Motley Fool. The Motley Fool.
† Goldstein, Phil. Verizon will pay up to $64M to settle lawsuit claiming it over-billed for family calling plan, FierceWireless. FierceMarkets, Questex Media Group LLC.

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