Charter to pay record $174 million settlement for ‘defrauding internet subscribers’

(Image: © Paul Lilly)

Charter Communications has agreed to a consumer fraud settlement that will see the company issue $62.5 million in direct refunds to customers in New York, the state's attorney general announced. It's the largest payout to consumers by an ISP in US history, and only about a third of the total amount of the settlement at large.

New York's attorney general filed a lawsuit against Charter in February 2017 alleging the company outright lied about internet speeds. The lawsuit described it as a "scheme" in which Charter, which initially operated as Time Warner Cable and later under the company's Spectrum brand, failed to deliver the kinds of internet speeds it advertised.

"Spectrum-TWC failed to deliver on this promise by leasing to a large number of its subscribers older-generation modems and wireless (or 'Wi-Fi') routers that it knew were incapable of achieving the promised Internet speeds," the lawsuit stated.

The lawsuit has now been settled, with Charter on the hook for $174.2 million "for defrauding internet subscribers." That includes direct refunds to over 700,000 subscribers, each of which will receive between $75 and $150, plus over $100 million in premium channels and streaming services that will be offered at no charge to around 2.2 million active subscribers.

"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 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."

As part of the settlement, Charter must also make a series of "marketing and business reforms," one of which is to specifically describe advertised internet speeds as "wired," and substantiate the claims through regular testing. Perhaps more importantly, it must also ensure subscribers have the necessary equipment to reach the advertised speeds "under typical network conditions."

According to the attorney general, Charter has already disbursed over $6 million in refunds to date for "inadequate modems" separate from this settlement. Those subscribers are not eligible for a further payment.