A significant resolution to a nationwide problem
OAKLAND — California Attorney General Rob Bonta today, alongside a bipartisan, multistate coalition, announced a $10.25 million settlement with major U.S wireless carriers after an industry-wide investigation of misleading advertising practices. The settlement, which is subject to court approval, resolves the allegations that the carriers violated the Unfair Competition Law and False Advertising Law by engaging in deceptive and misleading advertising. Today’s settlement provides strong, industry-wide injunctive relief that applies to all major wireless carriers and includes a payment of $10.25 million to the states, with $1.2 million going to California.
“We have all heard and seen advertisements announcing too good to be true cell phone deals, offering wireless devices for free or “unlimited” data. Turns out, many of those deals are indeed too good to be true,” said Attorney General Bonta. “Wireless carriers have exploited the fact that cell phones are now essential to our day-to-day lives, especially for low-income or immigrant consumers who are more likely to depend on cell phone plans for internet access. I am proud that this settlement requires industry-wide changes to the deceptive advertising practices which have become commonplace in the marketing of cell phones. As the People’s Attorney, I am committed to enforcing consumer laws in the state of California and speaking out for consumers nationwide.”
Today’s settlement provides industry-wide injunctive relief, which addresses all of the common misleading advertising practices committed by major wireless carriers. In addition to ensuring that all advertising is truthful, accurate, and non-misleading, the wireless carriers must comply with specific requirements, including:
- Unlimited Claims: Whenever a Wireless Carrier makes an “unlimited” data claim, they are required to clearly and conspicuously explain all material restrictions on data speed, including any thresholds at which unlimited data speeds may be slowed. Wireless carriers are prohibited from claiming that plans which set numerical caps on the quantity of data available are unlimited.
- Switch-and-Save Offers: Whenever a Wireless Carrier makes an offer to pay a consumer’s cost to switch carriers, the Wireless Carrier must clearly and conspicuously explain all requirements a consumer must fulfill to take advantage of the offer.
- Discounted Services Claims: Whenever a Wireless Carrier makes a cost-comparison or discounted services offer, they must make comparisons between services that are similar rather than making misleading apples-to-oranges comparisons. Similarly, if a Wireless Carrier intends to provide a discount or a savings after-the-fact in the form of cash, credit, or a rebate, they must explain how the consumer will receive the funds and how long the consumer must wait to receive the funds.
- Free or Discounted Device Claims: Whenever a Wireless Carrier offers consumers a “free” device as part of a plan, they must explain everything a customer must do to obtain the “free” device, including any fees they must pay or other devices they are required to purchase. Wireless Carriers are also prohibited from increasing the price of the underlying service or other relevant devices to make up for the cost of the “free” device.
- Device Lease Claims: Whenever a Wireless Carrier offers a device on lease as opposed to for purchase, they must make that fact clear to a consumer. Wireless Carriers are prohibited from characterizing leases as purchases.
- Employee Training: The Wireless Carriers are required to train all employees responsible for advertising and all customer service representatives on the provisions of this settlement to ensure on-the-ground compliance.
- Complaint Representatives: The Wireless Carriers are required to designate a dedicated employee to work with the attorneys general to resolve complaints from everyday consumers.
Over the years, competition among wireless carriers has been growing, and advertising by the carriers has become increasingly aggressive. As more consumers use their mobile phones for internet access, especially low-income consumers whose mobile phones may be their primary form of internet access, the cost and quality of mobile phone plans is increasingly important. In 2021, 27% of people with a household income of $30,000 or less were reliant on their smartphones for online access, compared to only 6% of people with a household income of over $75,000. Cell phones and mobile plans represent one of the larger financial decisions low-income consumers make in a given year.
Attorney General Bonta is committed to investigating and remedying harm to consumers affected by unlawful and deceptive business practices.
- Earlier this month, Attorney General Bonta, along with the District Attorneys of Alameda and Marin counties, and city and county of San Francisco, announced a $23 million settlement with Service Corporation International, the nation’s largest funeral service provider for engaging in false advertising and unlawful and deceptive acts in its marketing and sale of pre-need cremation packages.
- Also in April, Attorney General Bonta submitted a comment letter supporting the Consumer Financial Protection Bureau’s proposed rule which would close a regulatory loophole that enables banks to extract billions of dollars from consumers by charging overdraft fees without adequately disclosing basic credit terms.
- In February, Attorney General Bonta announced a settlement with two separate local Bakersfield landlords and their property management company, for multiple violations of the Tenant Protection Act, including unlawful rent increases, unlawful evictions, and failure to return security deposits on time.
- In December, Attorney General Bonta submitted a comment letter to the FCC applauding its efforts to re-establish nationwide net neutrality rules and urging the FCC not to preempt California’s own net neutrality law. In its draft order, the FCC agreed with Attorney General Bonta and concluded that California’s law is consistent with the proposed rules and should stay on the books.
Copies of the complaints can be found here, here, and here. Copies of the proposed judgments, pending court approval, can be found, here, here, and here.
