The U.S. Federal Trade Commission announced that it has filed a federal court complaint against AT&T, alleging that the company has misled millions of customers by charging them for “unlimited” data plans while reducing their data speeds. The complaint alleges that the company failed to properly disclose to unlimited data plan customers that their speeds would be throttled after reaching a certain amount of data use. In some cases, data speeds were allegedly throttled by up to 90%, “to the point that many common mobile phone applications – like web browsing, GPS navigation and watching streaming video –  become difficult or nearly impossible to use.” While AT&T’s marketing promoted “unlimited” data, customers were not meaningfully informed of the throttling policy, even when renewing their contracts, and customers who cancelled contracts after being throttled were charged early termination fees. FTC Chairwoman Edith Ramirez stated in the announcement that “AT&T promised its customers ‘unlimited’ data, and in many instances, it has failed to deliver on that promise. The issue here is simple: ‘unlimited’ means unlimited.” The FTC alleges that AT&T has throttled 3.5 million customers on more than 25 million occasions, thereby violating the FTC Act.

For its part, AT&T responded to MacRumors’ story on the complaint claiming that the FTC’s allegations are “baseless” and that the company has been “completely transparent with customers since the very beginning,” informing all unlimited data-plan customers via bill notices and a national press release that was widely published prior to the program being implemented. AT&T also noted that customers are notified by text message “before any customer is affected,” although the text message notably is a warning that speeds will be reduced after reaching a certain data threshold.