The Federal Trade Commission said Thursday it moved to stop Frontier Communications (NASDAQ: FYBR) from “lying to customers and charging them for [broadband] speeds it fails to deliver.”
Under a proposed order with the FTC and two California law enforcement agencies, Frontier will be prohibited from “tricking consumers about its slow internet service and is required to support its speed claims,” says the FTC. Frontier is required to provide current customers with free and easy cancellations when it fails to deliver the promised speeds.
The case concerns claims that Frontier made ads for its DSL internet service in several service packages. The FTC sued Frontier last May, alleging the company advertised it could deliver various DSL speeds. The FTC alleged “that Frontier failed to provide many consumers with the maximum speeds they were promised and the speeds they actually received often fell far short of what was touted in the plans they purchased.”
Frontier and the FTC and district attorneys in two California counties reached a settlement last Thursday. The deal is pending a judge’s approval in the U.S. District Court for the Central District of California.
The FTC Commissioners approved the settlement in a 4-0 vote. Frontier didn’t admit nor deny the allegations, reported Ars Technica.
Frontier will be required to pay $8.5 million in civil penalties and costs to the Los Angeles County and Riverside County District Attorneys’ offices on behalf of California consumers as well as $250,000 that will be distributed to Frontier’s California customers harmed by the company’s practices, according to the FTC. In addition, the company must discount the bills of California customers who have not been notified that they are receiving DSL service that is much slower than the highest advertised speed.
The FTC is requiring Frontier to deploy fiber-optic internet service to 60,000 residential locations in California over four years—at an estimated cost of $50 million to $60 million, according to the regulator.
Frontier stated the FTC’s complaint “included baseless allegations and disregarded important facts.” The company said in a statement it settled the suit “in good faith to put it behind us so we could focus on our business,” according to Ars Technica.
By Leslie Stimson, Inside Towers Washington Bureau Chief