Charter Communications has agreed to a record $174.2 million consumer fraud settlement with New York Attorney General Barbara Underwood, including millions in direct refunds to customers.
Underwood initially filed the complaint against Charter in early 2017, accusing the cable systems (formerly operated under Time Warner Cable but now operating under Charter’s Spectrum brand) of failing to deliver promised internet speeds and reliability.
Under the deal, Charter will pay out $62.5 million in direct refunds to more than 700,000 active subscribers, who will each receive between $75 and $150. Charter will also provide streaming services and premium channels valued at more than $100 million to about 2.2 million active subscribers at no cost.
The direct refund sum represents the country’s largest-ever payout to consumers by an internet service provider, the AG’s office said Tuesday.
“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,” said Attorney General Underwood in a statement. “Not only is this the largest-ever consumer payout by an internet service provider, returning tens of millions of dollars to New Yorkers who were ripped off and providing additional streaming and premium channels as restitution – but it also sets a new standard for how internet providers should fairly market their services.”
The initial complaint accused the cable operator of failing to fulfill internet service promises on a number of fronts, including leasing modems and wireless routers that were not capable of delivering internet speeds subscribers had paid for; marketing and charging for speed tiers of 100 Mbps and above while not maintaining enough network capacity to consistently deliver those speeds; throttling third-party content providers like Netflix; and representing a wired and WiFi connection as equal in terms of speed availability.
Charter completed its merger with TWC in May 2016, and in the last two years has made upgrades to its internet offerings across New York, including the roll out of Spectrum Internet Gig across its footprint in the state, and offering starting speeds of 100 Mbps since March 2017.
Charter, for its part, seems happy to put the litigation behind it and released the following statement:
“We are pleased to have reached a settlement with the Attorney General on the issue of certain Time Warner Cable advertising practices in New York prior to our merger, and to have put this litigation behind us. Charter has made, and continues to make, substantial investments enhancing internet service across the state of New York since our 2016 merger, as acknowledged by the Attorney General in this settlement. We look forward to continue providing the best TV, Internet, Voice and Mobile products to our customers, and to bringing broadband to more homes and businesses across the state.”
The Attorney General’s office acknowledged that following the investigation Charter has made “significant investments” to address the problems and improve internet service, including network enhancements, modem replacements and upgraded WiFi routers.
As part of the settlement Charter is also required to describe internet speeds as “wired” in advertisements, and disclose that wireless speeds may vary, along with factors that might lead to differences in actual experience.
Subscribers who are eligible for a refund or video and streaming services do not need to take any action right now. Charter will communicate with customers directly to notify them and must disburse refunds within 120 days.