T-Mobile was hit with $48 million in fines and restitution on Wednesday after federal regulators concluded that the wireless carrier had failed to inform customers about limitations in its unlimited data plan.
The mobile provider offered an “unlimited” plan but greatly slowed the data rate for customers who used more than 17 gigabytes of data within a single month, the Federal Communications Commission said. Prior to June 2015, T-Mobile didn’t adequately inform customers of the limit on the unlimited plan, the FCC said. Hundreds of customers complained, leading to an FCC investigation.
“Consumers should not have to guess whether so-called ‘unlimited’ data plans contain key restrictions, like speed constraints, data caps, and other material limitations,” said Travis LeBlanc, chief of the FCC’s Enforcement Bureau, in a statement. “With today’s settlement, T-Mobile has stepped up to the plate to ensure that its customers have the full information they need to decide whether ‘unlimited’ data plans are right for them.”
The settlement marked the second major action by the FCC over poorly disclosed limits on unlimited data plans. Last year, the agency proposed fining AT&T (T) $100 million. But more recently, the carriers have been clearer in disclosing limits on unlimited plans.
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T-Mobile CEO John Legere praised the agreement via his Twitter feed. “Good settlement with FCC today. @TMobile believes more info is best for customers,” he wrote. “Glad we could help schools with this solution as well.”
Under terms of a consent decree released on Wednesday, T-Mobile will pay a fine of $7.5 million, provide customers with $35.5 million worth of benefits and spend $5 million on a program that gives Internet service and connected devices to students in low-income school districts. The customer benefits will be offered as a 20% discount on accessories or four gigabytes of additional data on certain Internet data plans from T-Mobile or its prepaid subsidiary MetroPCS.
T-Mobile (TMUS) also agreed to explain its data slowdown provision more clearly and notify individual customers when their usage nears the threshold.
Under T-Mobile’s recently revamped unlimited plans, customers can use up to 26 gigabytes before the data rate is slowed. Video streaming is limited to DVD quality, however.