Charter Communications, the parent company of Spectrum, has agreed to pay a record $174.2 million consumer fraud settlement for defrauding internet customers in New York State.
The settlement was announced Tuesday by New York State Attorney General Barbara Underwood. The $62.5 million in direct refunds to consumers alone are believed to represent the largest-ever payout to consumers by an internet service provider (ISP) in U.S. history, according to Underwood.
In July, New York State not only revoked its approval of the 2016 merger of Charter and Time Warner Cable, it barred Charter, doing business as Spectrum, from operating in the state. Charter and the New York State Public Service Commission (PSC) have since been negotiating the matter.
The agreement settles a consumer fraud action alleging that the state’s largest ISP, which operated initially as Time Warner Cable and later under Charter’s Spectrum brand name, denied customers the “reliable and fast internet service it had promised,” according to the attorney general’s office. This is the first settlement to result from the attorney general’s major investigation of broadband internet service in New York.
“This settlement should serve as a wake-up call to any company serving New York consumers: Fulfill your promises, or pay the price,” Underwood said. “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.”
“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,” said Charter spokesman John Bonomo. “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 settlement includes direct restitution of $62.5 million for more than 700,000 active subscribers, who will each receive between $75 and $150, as well as streaming services and premium channels, with a retail value of more than $100 million, at no charge for about 2.2 million active subscribers.
Also under the settlement, Charter is required to implement a series of marketing and business reforms, including the requirement to describe internet speeds as “wired” and to substantiate them through regular speed testing. Following the attorney general’s investigation, Charter has made substantial network enhancements to improve its internet service in New York, Underwood said.