Straight Talk Users Sue Walmart And TracFone Over Throttling Of Unlimited Data Plans

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Once again, a lawsuit calls into question the definition of “unlimited” when it refers to smartphone data plans. This time, the plaintiff claims that Straight Talk Wireless (a partnership between TracFone and Walmart) is effectively putting monthly data caps in place by throttling data speeds for users once they use a certain amount of data. Furthermore, alleges the complaint, users aren’t being told about the throttling until it’s too late.

As you can see from the chart above (screengrabbed from the Straight Talk website), Straight Talk offers plans starting at $45/month that include “unlimited” mobile web access. There are no qualifiers in this chart to indicate that a user’s data speeds may be slowed because of overuse. To the plaintiff, such marketing is misleading.

“To control network data usage and costs, defendants have implemented monthly data usage limits which they fail to disclose to their ‘unlimited’ data plan subscribers,” reads the complaint. “A former Straight Talk employee stated that the monthly data cap in 2012 was between 2GB – 3GB, having been reduced from a prior 5GB limit at the behest of defendants’ network carrier partners. More recently, the lower bounds of the limit may have been reduced to 1.5GB, based on customer reports. Defendants actively conceal these limits from ‘unlimited’ data customers.”

You’ll likely remember that AT&T got into a heap of controversy when it began throttling unlimited customers when they reached that incredibly vague and ever-changing level of being in the top 5% of wireless data users. The company later revised its throttling policies to put definite thresholds for customers with unlimited plans.

It’s this lack of notification or published standards that bothers the plaintiff in this case. He also alleges that the company is canceling plans without notice.

“Defendants throttle data speeds or terminate their ‘unlimited’ customers’ data, typically without any notice or warning, when those customers exceed defendants’ undisclosed data usage limits,” reads the lawsuit. “At the direction of defendants’ wireless network partners, defendants also regularly and arbitrarily throttle or terminate ‘unlimited’ customers’ data even when a customers’ data usage is below defendants’ undisclosed limits.”

The plaintiff alleges that, because Straight Talk piggybacks on existing wireless networks, it is throttling and cutting off data use to customers in order to placate the partners who actually operate the networks.

“Defendants terminated customers’ data at the behest of their wireless network partners when a particular cell tower is at or near data capacity, regardless of whether that customer’s data usage has exceeded defendants’ secret data usage limits,” the complaint states.

When customers complain about throttling or cancellation, they can not get clear answers from Straight Talk representatives. Here is one bit of communication from a Straight Talk rep to a customer included in the lawsuit:

“[P]lease be informed that, the magnitude of data transmitted from your phone is recorded by our system on a daily basis and the determination of its impact to the totality of the system’s capacity is solely done by itself. If our system detects that your phone is transmitting abnormally excessive amount of data and is negatively impacting its capacity to provide service.’ [Sic.] When the customer asked what his data usage had been, and what Straight Talk’s data limit is, the Straight Talk representative responded as follows: ‘We do not have the exact limitations for data usage especially if you are on the unlimited service. … We regret to inform you that, we are unable to provide you with the estimated threshold or limitation set by the company for your Internet service usage.”

One plaintiff claims that when his service was terminated, he asked a Straight Talk rep to clarify how much data had been used, but “the representative claimed that he was unable to provide that information because Straight Talk’s system do not show customer data usage information.”

The suit, which hopes to be granted class-action status, seeks disgorgement of unjust profits, an injunction and compensatory and punitive damages for breach of contract, breach of faith, unconscionability, unjust enrichment, deceptive trade, unfair competition and consumer law violations.

The problem is — and this will certainly come up sooner rather than later — the Straight Talk terms and conditions include a mandatory binding arbitration clause that not only requires that all customer conflicts be resolved through arbitration — which severely limits the penalty on the defendants — but also includes a ban on class-action lawsuits.

No Limits to Tracfone’s Lies About ‘Unlimited’ Service, Class Claims [Courthouse News]