AT&T Inc. (NYSE:T), the second largest wireless carrier in the United States is facing a lawsuit filed by the Federal Trade Commission (FTC) for allegedly deceiving customers with its unlimited data plans.

AT&T Inc. Sued By FTC For Slowing Data Speeds

FTC allegations against AT&T

According to the FTC, AT&T Inc. (NYSE:T) misled millions of its smartphone customers by charging them for unlimited data plans while reducing their data speeds. The FTC said the company is reducing data speeds for customers by almost 90% in some cases.

The commission said AT&T (NYSE:T) failed to provide adequate information to customers regarding its unlimited data plans. The FTC said the wireless carrier failed to tell customers regarding its throttling policy. AT&T reduces the data speeds for customers once they reach a certain amount of data use within a given billing cycle.

At some point, it was difficult or impossible for customers to use many common mobile phone applications such as web browsing or GPS navigation.

In a statement, FTC Chairperson Edith Ramirez said, “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 pointed out that AT&T (NYSE:T) still failed to inform customers about the throttling program when they renewed their contracts for unlimited data plans. The commission added that customers who cancelled their contracts after experiencing data speed reduction were charged with early termination fees.

AT&T focus groups oppose throttling data speeds

The FTC alleged that AT&T Inc. (NYSE:T) started throttling data speeds for its unlimited data plan customers in 2011. The company reduces data speeds after customers used as little as 2GB of data within a billing period.

The commission described the AT&T’s throttling program as “severe” and affected at least 3.5 million unique customers for a total of more than 25 million times.

The commission emphasized that AT&T focus groups strongly opposed the idea of a throttling program. According to them, “unlimited should mean unlimited.”

The FTC said the AT&T Inc (NYSE:T) received thousands of complaints regarding low data speeds under the throttling program based on company documents.

AT&T’s response to allegations

AT&T Inc. (NYSE:T) said the allegations of the FTC were baseless and had nothing to do with the substance of its network management program. The wireless carrier added that it had been completely honest with customers since the very beginning.”

“We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented.  In addition, this program has affected only about 3% of our customers, and before any customer is affected, they are also notified by text message,” according to AT&T Inc. (NYSE:T).