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Tracfone Ordered to Refund Deceived Customers

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The Federal Trade Commission (FTC) filed a complaint against Tracfone and its subsidiary brands, including Straight Talk, Net10, Simple Mobile and Telcel America. The complaint alleges that Tracfone failed to disclose throttling and suspension terms to customers of its prepaid unlimited plans from 2009 to at least September 2013 and that customers were frequently deceived about what they were purchasing.

According to the complaint, Tracfone advertised their services as ‘unlimited’ but then would throttle customers anywhere from 60% to 90% once they exceeded internally set limits. The complaint says the throttling would generally begin at 1 – 3 GB, and termination of service was generally at 4 – 5 GB. Customers who came near the limit would be warned about ‘excessive use’ but the exact terms were not disclosed.

And, as if it wasn’t bad enough, the complaint further states that the throttling was not driven by congestion or technological constraints, but  “… because TracFone offered its ‘unlimited’ mobile data service at a fixed price, more data usage by its customers meant more costs, and less profit, for TracFone…”

Yesterday, the court ordered that Tracfone pay a settlement of $40 million, and has announced that customers who were throttled or had unlimited services suspended from 2009 – 2013 can file a claim for a refund of the services received. Customers who are unsure if they were throttled should file a claim anyway to check and see if they are eligible.

“The issue here is simple: when you promise consumers ‘unlimited,’ that means unlimited,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection told eCreditDaily. “This settlement means that Straight Talk, Net10, Simple Mobile, and Telcel America customers will be able to get money back from the company for services the company promised but didn’t deliver.”

If you believe you are eligible for a refund, or you used an unlimited plan from any of these companies before January 2015, you can file a claim here, and the FTC will check your eligibility.