The New York attorney general’s office hit Charter with a $174 million consumer fraud settlement, which includes $62.5 million paid directly to subscribers.
New York Attorney General Barbara Underwood said the settlement could be the biggest payout ever by a U.S. internet service provider. In addition to the $62.5 million paid to more than 700,000 subscribers (which comes out to about $75 to $150 per subscriber), Charter has to provide 2.2 million subscribers with free access to streaming services and premium channels at a cost of approximately $100 per subscriber.
The settlement today puts to rest a consumer fraud action alleging that Time Warner Cable (which now operates under Charter’s Spectrum brand) denied customers the reliable and fast internet service it had promised.
“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,” said 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.”
Charter appeared relieved by the outcome.
“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.”
In addition to the financial settlement, Charter is also now required to take on certain marketing and business reforms, including the requirement to describe internet speeds as “wired” and to substantiate them through regular speed testing. New York officials acknowledged that following the attorney general’s investigation, Charter has also made substantial network enhancements to improve its internet service in New York.