NYS announces record $174M consumer fraud settlement with Charter/Spectrum

Dec 18, 2018

New York State Attorney General Barbara Underwood on Tuesday announced a record $174 million consumer fraud settlement with Charter Communications, the corporate name for Spectrum, which provides cable, internet and phone services across the state.

According to the AG, the agreement settles a consumer fraud action alleging that the state’s largest internet service provider, which operated initially as Time Warner Cable and later under the Charter Spectrum name, denied customers the reliable and fast internet service it had promised.

The settlement calls for a $62.5 million payout in direct refunds to more than 700,000 active subscribers, who will each receive between $75 and $150. It also provides for free streaming services and premium channels for about 2.2 million customers.

The state says that Charter Spectrum is also required to implement a series of marketing reforms including the requirement to describe internet speeds as “wired” and to substantiate them through regular speed testing.

The Attorney General says that Charter will award a $75 refund to certain subscribed based on:

(1) Leasing an inadequate modem;

(2) Leasing an inadequate WiFi router; OR

(3) Subscribing to a Time Warner Cable legacy speed plan of 100 Mbps or higher.

b. Charter to award an additional $75 refund to each of over approximately 150,000 subscribers who had an inadequate modem for 24 months or more.

Charter will notify subscribers of their eligibility for refunds and disburse them within 120 days. 

The state says that  Charter has already disbursed over $6 million in refunds for inadequate modems to date, separate from today’s settlement. Because these subscribers received full compensation, they are ineligible for a further payment. 

2) Consumer Relief (In-Kind Video and Streaming Benefit): Worth over $100 million

In addition to the direct refunds detailed above, Charter will offer free streaming services to approximately 2.2 million active internet subscribers:

a. Charter will offer all subscribers currently receiving internet and cable television from the company a choice of either three free months of HBO or six free months of Showtime. (Note: This benefit is available to subscribers who do not already subscribe to both of the offered networks through Charter.)

b. All other active Charter internet subscribers will receive a free month of Charter’s Spectrum TV Choice streaming service—in which subscribers can access broadcast television and a choice of 10 pay TV networks—as well as a free month of Showtime.

-Charter will notify subscribers of their eligibility for video and streaming services and provide details for accessing them within 120 days of the settlement.

-Receiving the video and streaming services as restitution will not affect eligibility for future promotional pricing.

Charter Communications issued this 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 NYS Public Service Commission is involved in a separate dispute with Charter Spectrum, challenging its ability to operate in New York State.

The PSC has contended that Charter failed to deliver on benefits to state residents that were part of the earlier merger deal between Time Warner Cable and Spectrum, something that Charter disputes.