WASHINGTON—The Federal Communications Commission plans to fine AT&T Inc. $100 million for allegedly deceiving consumers about unlimited wireless data plans, the agency said Wednesday.
The FCC alleges that AT&T sold consumers data plans advertised as unlimited, then capped data speeds for those customers after they used a set amount of data within a billing cycle. The FCC says those capped speeds were much slower than the normal network speeds advertised by AT&T, and that they impaired consumers’ ability to access the Internet or use applications for the rest of their billing cycle.
The FCC says AT&T violated the transparency rule passed as part of its 2010 Open Internet rules by labeling the plans as unlimited. Most of those rules were struck down by a federal court last January, but the transparency rule was upheld.
“Consumers deserve to get what they pay for,” FCC Chairman Tom Wheeler said in a statement. “Broadband providers must be up front and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure.”
An AT&T spokesman said the company plans on “vigorously disputing the FCC’s assertions.” The spokesman said the FCC previously identified the practice as a legitimate and reasonable way to manage its network to benefit all customers.
This is the largest proposed fine in FCC history, according to a senior FCC official. The official said AT&T made billions off the practice.
The FCC said it has received thousands of complaints from customers with AT&T’s unlimited data plan who said they were surprised and misled by AT&T throttling their data speeds.
“Unlimited means unlimited,” said FCC Enforcement Bureau Chief Travis LeBlanc. “As today’s action demonstrates, the commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits.”
The FCC passed new Open Internet rules in February that bar mobile broadband providers from blocking or slowing down traffic to specific websites. Those rules expand the FCC’s authority to regulate wireless broadband providers.
The Federal Trade Commission (FTC) has taken legal action against the creator of a failed Kickstarter campaign. It’s the first such ruling made against a crowdfunding campaign owner.
Erik Chevalier of The Forking Path Co. has agreed to a settlement that prohibits him from “deceptive representations related to any crowdfunding campaigns in the future and requires him to honor any stated refund policy.”
Related: - Kickstarter Funded Board Game Canceled After Six Figure Raise
As we reported two years ago, Chevalier raised over $120,000 (well above his original $35,000 goal) from 1246 backers to create a board game called ‘The Doom That Came to Atlantic City.’ After a series of seemingly positive updates, Chevalier finally came clean and wrote, “the project is over, the game is canceled.”
The campaign may have been just another example of a Kickstarter entrepreneur getting in over his head — after all, many companies with good intentions simply fail. According to the FTC, however, that’s not the case with Chevalier.
In the complaint, the commission stated that Chevalier “never hired artists for the board game and instead used the consumers’ funds for miscellaneous personal equipment, rent for a personal residence, and licenses for a separate project.”
Under the settlement, Chevalier is ordered to pay $111,793.71, but the order is suspended because of his inability to pay. In a tweet, the FTC stated that if staff finds he misrepresented his financial condition, judgment would be due and the commission would pursue legal action to collect the funds. Chevalier, who wrote that he hopes to eventually refund everyone, is also prohibited from “failing to honor stated refund policies."
“Many consumers enjoy the opportunity to take part in the development of a product or service through crowdfunding, and they generally know there’s some uncertainty involved in helping start something new,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection in a statement. “But consumers should be able to trust their money will actually be spent on the project they funded.”
Fortunately for backers of the campaign, another company stepped up and delivered the board games (but not other rewards). The FTC’s announcement should provide further consolation.
The FTC has recently been focused on protecting consumers who are using emerging financial technology services. That the commission took legal action against a crowdfunding fraudster is a great sign and should be a cautionary tale for anyone else thinking about scamming backers out of their money.
But it's only one such case; the FTC should continue to police crowdfunding fraud if it's to have a lasting effect. In a tweet, the commission stated that it cannot disclose whether it is looking at any other failed campaigns, but that it is "aware of potential for fraud in FinTech platforms."
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