Wal-Mart, TracFone Hit with Class Action Lawsuit Over ‘Unlimited Data

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Wal-Mart and TracFone have been targeted by a class action lawsuit accusing the companies of falsely advertising their “Straight Talk” cell phone plans as having unlimited data without informing customers that their data access will be “throttled” or terminated.

According to the TracFone class action lawsuit, the companies created the “Straight Talk” plans in 2009, and have regularly advertised the “unlimited” data service plans. These cell phone plans quickly grew to become one of the largest prepaid cell phone plans in the United States.

The TracFone class action lawsuit alleges that Wal-Mart and TracFone established an internal limit on the data plan and would throttle or terminate the customer’s access to data once that limit has been reached. The companies do not inform their customers about this data limit. In response to customer complaints, the companies claim that the customers have “misused” their data plans but do not provide further explanation. The plaintiffs claim that their data limits are not restored until they renew their “Straight Talk” cell phone plans.

TracFone is the fifth largest wireless carrier in the United States. As of March 2013, TracFone had more than 23 million subscribers. TracFone holds contracts with Verizon Wireless, AT&T, Sprint and T-Mobil to use their networks to provide data service.

Wal-Mart is the exclusive retailer of “Straight Talk” cell phone plans, SIM cards and wireless phones. The Straight Talk brand was launched as a joint venture between TracFone and Wal-Mart in 2009.

According to the class action lawsuit, the defendants offer two Straight Talk plans. The first is the “All You Need” service plan with a designated limit of 30MB of data per month. The “Straight Talk” plan advertises unlimited data. Customers may choose to sign up for one of the following contract options: a one-month plan, one-month international plan, three-month plan, six-month plan or one-year plan.

In their class action lawsuit, the plaintiffs accuse the companies of setting a monthly data cap on customers’ data usage in order to save costs. However, the companies never informed users about this monthly limit and continued to advertise the data plan as “unlimited.” The plaintiffs believe that the monthly cap may be as low as 1.5GB.

Wal-Mart and TracFone have denied “throttling” their users’ data access. They argue that users who experience these data limits had violated their Terms and Conditions for data usage. According to the class action lawsuit, the terms are unclear about what constitutes “unauthorized use” under the Terms and Conditions. The plaintiffs allege that representatives from the companies have been unable to clarify this issue and leave the customers even more confused and bewildered about their data usage.

“In response to complaints from the members of the proposed class, defendants routinely blame customers for ‘misusing’ their data service, but fail to disclose how customers allegedly misused their data plans or explain the reasons that defendants have throttled or terminated customers’ data access,” the class action lawsuit said.

By filing the class action lawsuit, the plaintiffs are accusing Wal-Mart and TracFone of breaching their contracts, breaching the covenant of good faith and fair dealing, unconscionability, 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.

The plaintiffs are represented by Michael W. Sobol and Nicole D. Reynolds of Lieff Cabraser Heimann & Bernstein LLP, Daniel M. Hattis of Hattis Law and Cornelius P. Dukelow of Abington Cole.

The TracFone Unlimited Data Class Action Lawsuit is Hansel et al. v. Tracfone Wireless Inc. et al., Case No. 13-cv-03440, in the U.S. District Court for the Northern District of California.

UPDATE: On Jan. 28, 2015, the Federal Trade Commission announced it had reached a settlement with TracFone that will provide refunds to consumers. Click here or visit www.PrepaidPhoneRefund.com to find out how to file a claim!

UPDATE 2: The TracFone class action settlement received final approval on July 2, 2015.

UPDATE 3: According to the settlement administrator, the Tracfone class action settlement will become effective on Aug. 1, 2015 and checks will be mailed by Oct. 20, 2015.

UPDATE 4: Settlement checks were mailed out to Class Members starting on Mar. 22, 2016 through Mar. 29, 2016. According to the settlement administrator, Class Members must cash their refund checks no later than July 20, 2016.

UPDATE 5: On Mar. 26, 2016, Top Class Actions readers have started receiving settlement checks! If you filed a claim for the TracFone “unlimited” data class action settlement, keep an eye on your mailbox because checks are on the way!