TracFone Pays $45 Million|for Deceptive Ads

SAN FRANCISCO (CN) - A federal judge approved a $45 million judgment against TracFone for making false claims that its mobile phone contracts gave customers "unlimited" data.

U.S. District Judge Edward Chen approved the settlement on July 2. TracFone will pay $40 million to the Federal Trade Commission, for distribution to1.9 million class members, and another $5 million in attorneys' fees.

The 2014 consolidated class action claimed TracFone's deceptive ads misled customers about its prepaid Straight Talk, Net10, Simple Mobile and TelCel America data plans.

In fact, TracFone "throttled," suspended or terminated service to customers once they reached a 30-day data limit.

The class sued TracFone under California's Unfair Competition Law, its Consumer Legal Remedies Act and Florida's Deceptive and Unfair Trade Practices Act.

The FTC filed a separate enforcement action in January this year. Chen's approval puts the consolidated class action to rest.

"Depending on the precise injury, a class member experienced (i.e., whether their service was throttled, suspended or terminated) and when that injury occurred, class members who made a claim will receive between roughly $15 and $65 per affected phone line," Chen wrote. "TracFone further agreed to the entry of injunctive relief regarding its advertising and disclosure practices with respect to its 'unlimited' data plans."

Chen said that 1.8 million to 1.9 million customers will automatically receive payment without filing a claim, while others must submit a "simple" claims form to recover under the settlement.

As of June 22, more than 800,000 forms had been submitted, according to the settlement administrator.

TracFone attorney Ryan Sandrock told Courthouse News he could not comment on the settlement. The FTC did not return a phone call.

Class counsel will get $5 million in attorneys' fees, plus the full requested amount of $63,644.75 for costs.

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