Earlier this month, several state attorneys general announced that they secured a $10.25 million settlement with the country's largest wireless carriers, AT&T, T-Mobile, and Verizon, after a multistate investigation found that the carriers deceptively marketed "unlimited" plans and "free" devices and made other misrepresentations about fees and contracts.
The complaints (examples here, here and here) allege that the carriers' advertising lured consumers to enroll in plans with false promises and/or offers that failed to disclose key restrictions or details. Among other allegations, the states complain that the companies: (i) offer purportedly "unlimited" data plans that in fact may feature caps on consumer data usage; (ii) promise "free" devices upon enrollment in certain services without disclosing that consumers may be required to pay hidden fees or stay enrolled in the plan for a certain period of time; and (iii) deceptively advertise that they will beat competitors' rates by making apples-to-oranges comparisons.
In addition to the $10.25 million payment, the proposed court orders provide industry-wide injunctive relief, including the following requirements:
- "Unlimited" data claims must clearly and conspicuously disclose all material restrictions on data speed, including any thresholds at which unlimited data speeds may be slowed, and wireless carriers are prohibited from claiming that plans which set numerical caps on the quantity of available data are unlimited.
- Cost-comparison offers must compare similar products or services and have a reasonable basis.
- Offers of "free" devices must explain all requirements to obtain the free device, including any fees that must be paid, and wireless carriers are prohibited from increasing the price of the underlying service or other relevant devices to make up for the cost of the "free" device.
- Offers to pay consumers for switching to a different wireless carrier must clearly disclose the amount of the payment, how and when it will be paid, and any additional requirements that must be met.
Additionally, the defendants must appoint dedicated representatives to work with the attorneys general in addressing consumer complaints and must implement training and compliance programs.
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