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Charter Communications and Spectrum Management has agreed to a record-setting $174 million consumer fraud settlement with New York State Attorney General Barbara Underwood for defrauding Internet subscribers.
The settlement comes following a lawsuit that was filed last year alleging that Charter Communications and its predecessor, Time Warner Cable, “denied customers the reliable and fast internet service it had promised.”
Underwood said that the record $174.2 million consumer fraud settlement includes $62.5 million in direct refunds to customers, which “is believed to represent the largest-ever payout to consumers by an internet service provider in U.S. history.” More than 700,000 Spectrum customers are expected to receive between $75 and $150 as part of the refund.
The company also agreed to provide 2.2 million of its active subscribers in New York more than $110 million worth of streaming services and premium channels such as HBO and Showtime at no charge, Underwood noted. All other Charter Internet subscribers will also receive a free month of Charter’s Spectrum TV Choice streaming service and a free month of Showtime.
The lawsuit filed last year alleged that Charter failed to deliver the Internet speed or reliability it had promised in “aggressive marketing” campaigns. The leased deficient modems and routers to subscribers and charged more for Internet speeds they could not provide.
“(Charter) guaranteed that subscribers would enjoy seamless access to their chosen internet content while engaging in hardball tactics with Netflix and other popular third-party content providers that, at various times, ensured that subscribers would suffer through frozen screens, extended buffering, and reduced picture quality,” the lawsuit stated.
Aside from the $174 million payout, Charter is also required to implement a series of precedent-setting marketing and business reforms, establishing a new model for the broadband industry.
“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,” Underwood stated. “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.”
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