FTC settles with TracFone over data throttling

TracFone will pay the Federal Trade Commission $40 million to settle charges that the prepaid mobile provider intentionally slowed the data speeds of heavy users.

In a statement released Wednesday, the FTC says consumers with a Straight Talk, Net10, Simple Mobile, or Telcel America plan before January can claim a refund.

The agency claims TracFone deceived customers with its prepaid unlimited plans, slowing down data speeds -- called "throttling" -- or cutting off customers who hit a fixed limit during a 30-day window.

"The issue here is simple: when you promise consumers 'unlimited,' that means unlimited," said Jessica Rich, director of the FTC's Bureau of Consumer Protection, in a statement.

The lawsuit is the latest in a string of settlements aimed at wireless providers accused of misleading consumers. Last month, the agency settled with T-Mobile for $90 million over bill "cramming," where customers are charged for third-party services without their consent. The FTC has also cracked down on unauthorized in-app purchases, targeting companies including Apple, Amazon and Google.

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