Yesterday, the Connecticut Attorney General’s Office announced that it had settled with major cell providers, AT&T Mobility LLC, Cricket Wireless LLC, T-Mobile USA, Inc., Cellco Partnership, D/B/A Verizon Wireless, and Tracfone Wireless Inc. over the issue of misleading advertising. The settlement yielded approximately $113,775 for the state of Connecticut but totaled out to $10.25 million across the United States.
“Like the internet, cell phones and mobile data plans have become a necessary utility for most people in today’s world,” said Bryan Cafferelli, Commissioner of the state’s Department of Consumer Protection. “Taking advantage of this necessity by utilizing misleading advertising tactics to extract more money from consumers is wrong, and we hope this settlement will result in more truthful promises up front, better service for consumers along the way, and quicker fixes when issues do arise.”
The cellular providers were accused of various misleading advertising practices, such as offers of unlimited data plans that contain hidden restrictions, misleading offers for free devices that were saddled with terms and conditions, and offers of payments or increased savings to customers who switch providers that did not disclose either how incentives would be paid or that did not result in increased savings.
The issue of “data throttling”, slowing or limiting a customer’s data speeds once they reach an undisclosed data threshold in their so-called “unlimited” data plan, has been especially contentious in recent years. In 2019, AT&T settled with the Federal Trade Commission for $60 million dollars as a result of data throttling allegations, the proceeds of which were disbursed to customers as bill credits and former customers as checks.
While the monetary gains of the settlement may be sparse, it also required the three cell providers to enter into agreements with the state of Connecticut that would more closely dictate the ways in which they can advertise their products and services going forward. The agreements will require companies to be more transparent in their advertisements, stop providers from describing plans that use data throttling as unlimited, present the terms and conditions of their services more prominently in their ads, and clearly disclose fees when applicable.
Providers will also have to make clear to customers when they are entering into lease agreements for devices, to prevent customers from thinking they are purchasing them outright. Any plan that offers customers a “free” device, must clearly state its terms and conditions required, including any fees or required purchases necessary. Providers must also hire or appoint a dedicated employee to work with the AG’s Office going forward in an effort to address consumer complaints and train its customer service and advertising departments on the conditions specified in the agreement so that they may act in compliance with it.
“Our settlement today forces major reforms across the wireless industry, requiring these companies to be truthful and transparent in their advertising and marketing,” said William Tong, Connecticut’s Attorney General. “If consumers continue to get the run-around from customer service representatives, we will now have a dedicated liaison working directly with state attorneys general to get consumers the answers and help they deserve,”
Connecticut will be receiving $27,400 from AT&T and Cricket Wireless, $53,374 from T-Mobile, and $33,000 from Verizon, Cellco, and TracFone. Per their written agreements, the funds will be paid out directly to the Attorney General’s Office, to cover legal costs, be applied to consumer protection funds, future monitoring of compliance to the agreements, or disbursed at a later date for the purpose of customer restitution.
In spite of the settlement, the CTIA, a trade association that represents the interests of American cell providers, provided a statement to Inside Investigator denying any wrongdoing.
“These voluntary agreements reflect no finding of improper conduct and reaffirm the wireless industry’s longstanding commitment to clarity and integrity in advertising so that consumers can make informed decisions about the products and services that best suit them,” read the statement.
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