Why Companies Should Think Twice Before Hyping Products

Photo Illustration: Benjamin Ritter; Source: Getty Images

Businesses that describe their products in superlatives are taking note of a March small-claims court ruling in Simi Valley, Calif. Matt Spaccarelli, an unemployed truck driver and student, sued cellular giant AT&T for slowing down the “unlimited” data plan for his iPhone, asking the court for $10,000 in damages. Although he was awarded a modest $850, he set a precedent that may make companies think twice before hyping their products.

Spaccarelli argued AT&T had no right to refer to itself as the “fastest” network after it began throttling the busiest of its 17 million smartphone accounts with -unlimited-data plans. The wireless carrier, which stopped offering all-you-can-use data plans in 2010, earlier this year put the brakes on users who consume more than 3 gigabytes per month—roughly the amount of data required to download two full-length movies to a cellphone. Users like Spaccarelli say the speed limits often kick in after they’re only one third of the way to the 3GB limit.

“There’s a spectrum crunch in our industry,” says AT&T spokesman Mark Siegel, noting that data traffic on its wireless network doubled last year. “Like other companies, we are taking steps to ensure that all our customers can use the network.” Although he declined to specify the rate of throttling, he said it affected fewer than 5 percent of AT&T’s customers and noted that their data was still “unlimited.” He said AT&T doesn’t claim to have the fastest network; rather, it operates the nation’s “largest 4G network.”

But customer-service experts like Jeanne Bliss say the settlement is the latest in a series of events influencing the way businesses present their products. “I think it will affect future offers,” says Bliss, a Los Angeles customer-service consultant and author of I Love You More Than My Dog, about customer loyalty. “If you say something is unlimited, it’s gotta be unlimited.” Companies may also hesitate before calling theirs the “fastest” or “best,” and they may not be as willing to use “all you can eat” in any context—at least not before consulting their lawyers. Bliss adds that it isn’t the court loss but the prospect of a social-media firestorm similar to the one generated after Spaccarelli’s victory that will fuel those fears.