TracFone's $40M Fine for Data Throttling: How to Claim Your Refund

Hot on the heels of FTC and consumer lawsuits against AT&T for "throttling" cell phone data, the FTC has fined discount prepaid cell phone retailer TracFone $40 million over allegations that it throttles "unlimited" data plans.

The $40 million fine will go toward paying refunds to customers who had the bandwidth on their "unlimited" data service slowed by as much as 90 percent when they reached a certain amount of data usage per month.

Which customers are affected, and how can you go about getting a refund?

'Unlimited'? Yeah, Not So Much

In its marketing materials, TracFone promised customers "unlimited" data usage each month, but apparently was unable to cope with the high costs of providing the service. In an attempt to induce customers to reduce their data usage, TracFone would slow down, or "throttle," customer connection speeds by 60 percent, though the slowdown could reach up to 90 percent, according to an FTC press release. In some cases, they would cut off a customer's cell data entirely. Even customers who received a warning about their "excessive data usage" weren't told what the threshold was.

TracFone did make some disclosures about its throttling practices in 2013, but the FTC didn't think those disclosures were "clear and conspicuous," which is required if a disclosure prevents advertising from being otherwise deceptive. TracFone's disclosures about throttling "were in very small print or on the back of packages or cards where consumers were likely to miss them," according to the FTC.

How to File a Claim

Customers who used one of TracFone's services -- such as Straight Talk, Net10, Simple Mobile, or Telcel America -- between July 24, 2009, and December 31, 2014, had an "unlimited" data plan, and had their data throttled, are entitled to file a claim for a refund by going to PrepaidPhoneRefund.com. The FTC suggests that even if your bandwidth wasn't throttled, you should at least file a claim to see if you're eligible.

The $40 million settlement has only been proposed, and still has to be approved by a federal judge before TracFone will pay claims. However, you can still submit a claim.

Because the settlement is still unapproved and the claims period is still open, it's unclear how much each claimant will receive. According to the claim instructions, an individual person's repayment depends on the number of people who file claims, when an individual was a customer, and how an individual's service was affected.

Related Resources:

• FTC Slaps TracPhone With $40 Million in Customer Refunds in Response to Throttling Practices (Inside Counsel)
• AT&T 'Cramming' Settlement: $105M for Bogus Cell-Phone Charges (FindLaw's Decided)
• SiriusXM to Pay $3.8M Over Unwanted Charges, Failure to Cancel (FindLaw's Decided)
• How Are Settlements Paid? (FindLaw's Injured)