TracFone's Straight Talk, Walmart sued over unlimited data claim

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América Móvil's U.S. MVNO TracFone Wireless and Walmart, which sells TracFone's Straight Talk brand, were sued in a proposed class action lawsuit in federal court in California, with the plaintiffs alleging that the companies falsely advertise Straight Talk as providing unlimited data service when the plans actually throttle users' speeds.

The plaintiffs in the suit detailed how the companies slowed their speed of service or cut it off it altogether and then blamed the subscribers for misusing of the service. The plaintiffs David Hansel, Edward Tooley and Christopher Valdez filed their claims on behalf of others, and allege breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment, and violations of Florida's Deceptive and Unfair Trade Practices Act, California's Unfair Competition Law and California's Consumer Legal Remedies Act.

According to Phone News, the plaintiffs are also seeking an order certifying the proposed class, an order permanently enjoining defendants from their improper conduct, and a judgment awarding restitution, actual damages, exemplary damages, prejudgment and post-judgment interest, attorneys' fees and costs.

At issue is Straight Talk's fair-usage data policy, which is not explicitly advertised by the company but has been noted by TracFone representatives. Straight Talk offers unlimited talking, texting and data starting at $45 per month for select feature phones, Android smartphones and, as of earlier this year, Apple's (NASDAQ:AAPL) iPhone. The suit is seeking clarifications on the company's exact policies.

"We offer wireless services from a variety of carriers, each with plans designed to fit the differing needs of our customer base," a Walmart spokesperson told FierceWireless. "Each is governed by the individual carrier's terms, conditions and restrictions." A TracFone spokesman did not immediately respond to a request for comment.

In an April company blog post, Straight Talk denied claims that it only offers users 1.5 GB of data per month.

"You may have heard rumors online that there is a hard cap of 1.5 GB for data on Straight Talk," the company wrote. "We want to clear this up for you right away: We are NOT cutting off data at 1.5 GB on Straight Talk. The data limit in reference only applies to Bring Your Own Phone (BYOP™) AT&T-compatible SIMs on our sister brand, NET10. In fact, most of our customers enjoy their unlimited data plans with no issues or complaints regarding their data speeds or service. Please see sections seven and eight of Straight Talk's terms and conditions for full details." (The bolding and links were included in Straight Talk's original post.)

In its post, Straight Talk also offers hints on how users can limit their data consumption, including switching to Wi-Fi when available and employing data-management apps like Onavo.

Straight Talk's statements in its post dovetail with what a Straight Talk spokesperson told FierceWireless in January. The spokesperson, who declined to be named due to company policy, said Straight Talk evaluates customers' data intake on a case-by-case basis and will throttle the speeds of those users who the company deems to be consuming too much data. The spokesman said "continuous video streaming" and other data-heavy services could cause a user to consume too much data, in which case the company would contact the user and warn them of a possible slowdown in their data speeds.

A number of wireless carriers employ similar tactics to limit subscribers' data consumption, but most advertise a specific threshold that, if users cross, they then have their data speeds slowed. Sprint (NYSE:S) is one of the only wireless carriers that continues to offer unlimited smartphone data, and recently announced a promotion that grants users unlimited data services for as long as they stay with Sprint.

For more:
- see this Law360 article (sub. req.)
- see this PhoneNews article

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