FTC sues AT&T claiming it throttled 3.5M unlimited data customers without proper notification

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David Paul Morris | Bloomberg

The FTC is suing AT&T for improperly throttling customers on unlimited data plans. Photographer: David Paul Morris/Bloomberg

Danielle Abril

Staff Writer- Dallas Business Journal

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The Federal Trade Commission has filed a lawsuit against AT&T Mobility claiming that the company cut speeds of 3.5 million customers with unlimited data plans without giving them proper notification.

The FTC filed the lawsuit with the U.S. District Court for the Northern District of California, San Francisco Division on Tuesday.

"If you make a promise about unlimited service, we expect you to fulfill those promises," FTC Chairwoman Edith Ramirez said during a press call, adding that the commission is seeking restitution for all affected customers that could total millions of dollars.

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The FTC also seeks that AT&T discontinue the practice, claiming that it's possibly still continuing today. The agency alleges the throttling began in 2011.

AT&T (NYSE: T) released a statement in response to the lawsuit calling the allegations "baffling" and "baseless."

"We have been completely transparent with customers since the very beginning," Wayne Watts, AT&T senior executive vice president and general counsel, said in a released statement. "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 percent of our customers, and before any customer is affected, they are also notified by text message."

The FTC alleges that Dallas-based AT&T marketed its unlimited data plans to customers. Later, the company determined that it wasn't profitable to continue the plans and began throttling customers, in some cases up to 90 percent, more than 25 million times without proper disclosure, the FTC claims. The practice had nothing to do with network congestion, Ramirez said.

Danielle covers technology, retail, restaurants and hospitality for the Dallas Business Journal. Subscribe to our new TechFlash email newsletter.