NEW YORK -- Eligible New York Spectrum subscribers will receive direct refunds after a consumer fraud lawsuit was settled. And Congressman-elect Anthony Brindisi still wants the company to be removed from the state.
New York State Attorney General Barbara Underwood announced a historic $174.2 million settlement with Charter for “defrauding internet subscribers.”
The settlement would be the largest-ever payout by an internet service provider in United States history.
New York consumers will receive $62.5 million in direct refunds, with more than $100 million going to premium channel and streaming service subscribers.
According to the AG’s office, the agreement settles a consumer fraud action alleging that the state’s biggest ISP, formerly Time Warner Cable and now under Charter’s Spectrum brand name, denied customers the reliable and fast internet as they had promised.
This is the first major settlement from the attorney general’s investigation into 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,” said Attorney General 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.”
Just months ago, the Public Service Commission said Spectrum was not meeting conditions agreed to in 2016.
Assemblyman and Congressman-elect Anthony Brindisi says it's time to kick Spectrum out of New York.
Brindisi says the rate hike New Yorkers got back in November is unacceptable. And now he's calling on the Public Service Commission to put their foot down.
"So today I’m asking the Public Service Commission to make February 11 the absolute final deadline for Charter Spectrum to present its plan to give customers the service they deserve and it's time to show them the door here in new York state,” said
He's says he's written a letter to the PSC telling them no more extensions.
Tuesday's settlement included direct restitution for more than 700,000 active subscribers, who will get between $75 and $150, as well as streaming services and premium channels, at no charge for approximately 2.2 million.
It also includes that Charter needs to implement marketing and business reforms across the broadband industry.
The AG says that following the investigation, Charter has made “substantial network enhancements to improve its internet service in New York.”
Here are the financial terms to the agreement, provided by Underwood’s office:
1) Consumer Relief (Direct Refunds): $62.5 million
a. Charter to award a $75 refund to each of over 700,000 active subscribers 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.
Note: 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.
3) Substantial Network Investments
Following the Attorney General’s investigation, Charter made significant investments to address the problems identified in the complaint and improve internet service in New York. This includes network enhancements, modem replacements, and upgraded WiFi routers.
Marketing and Business Reforms
The settlement also includes the follow key injunctive terms:
1) Affirmative Advertising Obligations: Charter is required to (a) describe internet speeds as “wired”; (b) disclose that wireless speeds may vary; and (c) disclose the factors that might lead actual experience to vary, including based on the number of users and device limitations. This applies to all advertising and marketing of speeds, including television and other commercials, website and website communications, print ads, bill inserts, emails, and more.
2) Substantiating Internet Speeds: Charter must substantiate internet speeds using an industry-accepted testing methodology, and discontinue any speed plan that cannot be substantiated.
3) Advertising prohibitions: Charter is prohibited from making unsubstantiated claims about (a) the speed required for particular internet activities like streaming; (b) the reliability of the internet service (e.g., no buffering, no slowdowns); or (c) the availability of the promised speed over WiFi.
Charter is also prohibited from describing internet speeds as “consistent” without fully satisfying the FCC Consistent Speed Metric and must make commercially reasonable efforts to deliver access to all online content and services featured in its advertisements.
4) Equipment Reforms: Charter is required to: (a) provide subscribers with equipment capable of delivering the advertised speed under typical network conditions when they commence service; (b) promptly offer to ship or install free replacements to all subscribers with inadequate equipment via at least three different contact methods; and (c) implement rules to prevent subscribers from initiating or upgrading service without proper equipment for the chosen speed tiers.
5) Sales and Customer Service Training: Charter must train customer service representations and other employees to inform subscribers about the factors that affect internet speeds. Charter must also maintain a video on its website to educate subscribers about various factors limiting internet speeds over WiFi.