Prosecutors in New York have settled their consumer fraud lawsuit against Charter Communications for a record $174.2 million, calling the $62.5 million direct refund to customers the biggest by an internet provider in U.S. history.
The agreement settles a lawsuit 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. The Attorney General’s office said it is the first settlement to result from its major investigation of broadband internet service in New York.
“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 Barbara D. Underwood. “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.”
Direct restitution of $62.5 million will go to more than 700,000 active subscribers, each of whom will receive between $75 and $150. Streaming services and premium channels, with a retail price of more than $100 million, will be provided at no charge for about 2.2 million active subscribers.
Charter is the No. 2 cable provider in the U.S. with about 28 million customers getting its broadband and internet. It acquired Time Warner Cable and another major regional operator, Bright House, in 2016.
The settlement will also require Charter to implement marketing and business reforms, including the requirement to describe internet speeds as “wired” and to substantiate them through regular speed testing. The Attorney General’s office said these reforms set the stage for major marketing and business changes across the broadband industry. After the investigation, Charter has also made substantial network enhancements to improve its internet service in New York.
“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,” the company said in a statement. “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.”