TracFone Learns a $40mil Lesson in Keeping Promises
When the news reports on big dollar class action settlements, it’s common to wonder what a company must have done to warrant such an enormous award. In many cases, it’s a simple answer—companies do or fail to do common sense things that get them into trouble. Such was the case with TracFone, which recently entered into a $40mil class action settlement.
TracFone’s Data Plans
TracFone didn’t do anything complex or technological to get themselves into trouble. Rather, the claim was that it simply failed to keep its promises.
Many wireless carriers nowadays require that users pay for data used on cellphones. All that streaming video, Facebook use, and other data, has a price to it. But TracFone advertised to its consumers that they didn’t have to worry about that. Instead, TracFone touted that it was offering unlimited data for one set price. Consumers could pay one amount, and do what they wanted for as long as they want without incurring additional data charges on their cellphone.
This sounded like a great idea. And it well may have been. The problem was that the government claimed that TracFone didn’t actually keep that promise.
TracFone Gets Into Trouble
What TracFone was allegedly doing, however, was “throttling” data of higher users. This means that the data speeds of certain users were purposely slowed down, presumably to discourage excess usage of data. TracFone was accused of slowing data speeds from 60-90%, for those who had used 1-3 gigs of data. Worse, TracFone was accused of not disclosing that policy, or else keeping it hidden in its contractual agreements. At some point, TracFone would actually suspend the data use of its customers when five gigs were used up.
When TracFone customers called the company to complain, they were apparently met with a pre-recorded message, warning them to avoid excessive data usage.
FTC Sues TracFone
The FTC eventually caught on, and sued TracFone in a class action settlement. When companies make promises they don’t keep, or mislead the public into believing they’re getting something they’re not, it can be construed as an unfair or deceptive trade practice. The FTC also has other truth in advertising rules that TracFone’s practices violated as well.
The bottom line is that if companies offer something to consumers, they need to live up to their promises. Taking advantage of consumers by advertising one rate or deal, but offering another, will lead to class actions and severe financial penalties.
If you have been a victim of unfair or deceptive company practices, you’re likely not the only one. Keogh Law handles consumer class actions. Talk to us today to discuss whether you may have a case or claim against a company that may not be playing fair with consumers.
If you feel that your consumer rights have been violated call us at (866)726-1092 or contact us online today!