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    Friday
    Feb242012

    Does AT&T's unlimited data violate FCC/FTC's Truth in Advertising Act? Yes? No?

    CNET has news about a person who won $850 in small claims court vs. ATT Wireless's unlimited data plan throttling his data use after 1.5-2GB.

    Throttled iPhone user takes AT&T to court, wins $850


    by  February 24, 2012 4:07 PM PST

    A customer who filed a complaint against AT&T after having his wireless data speeds throttled has come out the victor.

     

     

     

    One of the points made is ATT is looking to appeal

    The victory could be short-lived for Spaccarelli, the AP said. AT&T spokesman Marty Richter told the outlet the company was "evaluating" the possibility of an appeal.

    Some have said ATT has a case because no where in the contract does it say it cannot throttle the unlimited data plan.

    But, maybe the FCC and FTC can come to the rescue of consumers.  How?  Remember those overhyped long distance plans, that had restrictions in contracts that were not mentioned in the ads?  The FTC and FCC did something about that and created the "Truth in Advertising in Telecommunications and Electricity" dated Mar 2000.

    NewImage

    Here are some parts that should get you and ATT thinking.  Maybe the rest of the mobile carriers and even Comcast's Internet throttling over 250 GB should consider this as well.

    The FTC's of truth-in-advertising law that has been developed through Section 5 of the FTC Act, which prohibits "unfair or deceptive acts or practices," provides helpful guidance to long distance carriers.

    ...

    A. General Concepts of Advertising Law

    Today, I will describe how the concepts of advertising law apply to the advertising of telecommunications services and electricity. In general, Commission law requires that advertising be truthful, fair, and substantiated.

    Each of these concepts is detailed in formal policy statements adopted by the Commission or addressed by statute. A deceptive act is one that contains a misrepresentation or omission that is likely to mislead and be detrimental to consumers who are acting reasonably under the circumstances.(2) An unfair act or practice is one which causes or is likely to cause substantial consumer injury, not reasonably avoidable by consumers themselves, and not outweighed by countervailing benefits.(3) Although the Commission challenges conduct that is unfair, the majority of our actions in the advertising area target deceptive ads.

    ATT claimed unlimited data plan.

    In all advertising cases, the Commission must determine exactly what claims are made, and whether there is substantiation to support those claims. We look at both express and implied claims. Express claims are claims that unequivocally state the representations. For example, an ad which says: "long distance services to 100 countries" makes an express claim. Implied claims are anything else and range on a continuum from language that is virtually express to language that literally says one thing but strongly suggests something else. For example, an ad which says: " 7 cents a minute" may make an implied claim that there is no minimum charge for each call. In determining the claims that an ad conveys, the Commission examines "the entire mosaic, rather than each tile separately."(5)

    Advertisers must make truthful claims and substantiate all objective claims. These rules of the road, of course, apply both to advertisers using traditional media and those who market their products and services on the Internet, telephone, e-mail or through any other media.

    Was throttling omitted from ads and should have been disclosed in advertisement?

    B. Deception by Omission

    Ads can be deceptive because of what they do not say. Let me give you a few examples. If an ad omits material information, an ad can be deceptive even if everything else in the ad is truthful. This is called deception by omission. An ad will be deceptive if it fails to disclose qualifying information that, in light of the representations made, would be necessary to prevent consumers from being misled. We determine whether material information has been omitted by examining a typical buyer's expectation and understanding of the advertiser's claims.

    In the Dial Around context, if an ad represents that all calls are 10 cents a minute, but fails to disclose that all calls are subject to a 50 cent minimum charge, the ad would likely be deceptive. A reasonable consumer would likely conclude that a one minute call would be 10 cents, not 50 cents. The same would be true if an ad made specific per minute price claims but failed to disclose that there was a mandatory monthly fee.

    C. Material Limitations on Service should be disclosed

    Advertisers for Dial-Around and other long distance services must take special care to make certain that material limitations on services are disclosed in the ads. Given the importance of price information, any significant conditions or limitations on the availability of the advertised rates should also be disclosed clearly and conspicuously. I will talk more in a moment about what makes a disclosure clear and conspicuous. But, clear and conspicuous disclosures are important in advertising law generally, and they have special meaning in the Dial-Around context because ads are the primary source of price information for consumers.

    Let me give you some examples of situations where disclosures should be used to avoid deception. If an ad features the phrase "10 cents a minute" and that rate is available only during certain times of the day, the failure to clearly and conspicuously disclose the restriction would be deceptive. Likewise, if there are significant geographic restrictions, that fact should also be disclosed. Additionally, terms such as "Basic Rate" should be used only if the meaning of that term is clear to consumers.

    An ad cannot refer to a toll-free number or a website to make disclosures that should be made in an ad. While advertisers are encouraged to use customer service numbers and websites to offer consumers more information, these sources cannot cure misleading claims in the ad itself.

    When you signed up for ATT's unlimited data plan did you feel like you knew 1.5 - 2GB was the cut off?

    In simple terms, disclosures should be presented so that consumers actually see them and understand them. That means disclosures should be clear, prominent, and in close proximity to the claim being modified. There should be no distracting visual or audio elements surrounding the disclosures. Also, legalistic disclosures or those buried in fine print will not be effective. The FTC has a lot of experience with disclosures in a variety of contexts. We enforce certain statutes and regulations that are very specific as to how and when disclosures should be made.

    You would think that some of the same people who worked on this FCC/FTC truth in advertising act are still around and they are watching ATT.  Remember those old Bell System commercials?

    This Sprint ad from 2002 has disclosures.

     

     

     

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    Reader Comments (1)

    Utterly indited subject matter, thankyou for selective information .that is great blog. A fantastic read. I will definitely be back.

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