No Limits to Tracfone’s Lies About ‘Unlimited’ Service, Class Claims

SAN FRANCISCO (CN) - Tracfone Wireless falsely advertises "unlimited" data plans, but it does have limits, and it terminates the prepaid service and then claims that it does, but does not, track customers' data, customers claim in a federal class action.

Lead plaintiff David Hansel sued Tracfone Wireless dba Straight Talk Wireless, and Wal-Mart Stores.

Tracfone Wireless is the fifth-largest U.S. wireless carrier, claiming 23.2 million subscribers. It offers prepaid service plans and has agreements with Verizon, AT&T, Sprint and T-Mobile for use of their networks.

Its most popular service is the Straight Talk "Unlimited" plan, created in 2009, which offers unlimited data. Customers can sign on for one, three, six or 12 months, with costs ranging from $45 to $495, according to the complaint.

But it's not unlimited, the class claims.

"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," the lawsuit states. "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.

"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. 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.

"Defendants publicly deny having any 'fixed' limits on data usage and claim that 'most customers who experience throttling' are engaged in 'unauthorized uses' set forth in Straight Talk 'Terms and Conditions.' But these Terms and Conditions are not reasonably disclosed or agreed to by customers, and are also riddled with vague, confusing, contradictory and unconscionable provisions."

Tracfone and Wal-Mart began marketing a "Bring Your Own Phone" program in early 2012 to take advantage of the smartphone market, Hansel says in the complaint.

He claims the Straight Talk plan is crooked by design, and that "In response to complaints from the members of the proposed class, defendants routinely blame customers for 'misusing' their data service, but fail to disclose how customers allegedly misused their data or explain the reasons that defendants throttled or terminated customers' data access."

Hansel claims Tracfone's throttling or termination of service stems from its agreements with other carriers.

"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.

"Defendants refuse to provide a clear answer as to why they throttled or terminated any particular customer's data," the complaint states. "One Straight Talk representative provided the following inscrutable 'explanation' to a customer: '[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.' When plaintiff Christopher Valdez asked a Straight Talk representative how much data he had used before defendants terminated his data, the representative claimed that he was unable to provide that information because Straight Talk's system do not show customer data usage information."

The plaintiffs say they finally heard from a Tracfone "executive resolution specialist," after a customer filed complaints with the Federal Communications Commission and Better Business.

The "specialist" claimed that "Tracfone/Straight Talk doesn't track your usage, AT&T or T-Mobile does. When on a given cell phone tower (AT&T or T-Mobile), and you use a lot of data, this affects other subscribers," the complaint states.

The plaintiffs 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.

Their lead counsel is Michael Sobol with Lieff Cabraser Heimann & Bernstein.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit