Facing allegations of defrauding customers, Charter Communications agreed this week to a $174.2 million settlement that includes the largest direct refund payout for a telecom company in U.S. history, New York Attorney General Barbara Underwood announced on Tuesday.
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The company, which operates under the Spectrum brand name and includes the former Time Warner Cable, will pay $62.5 million in direct refunds to customers. It also agreed to provide streaming service and premium channels collectively valued at more than $110 million to subscribers at no additional charge.
“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,” Underwood said 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.”
The settlement arose from a lawsuit that accused Charter of providing internet speeds to subscribers well below their expected speed and quality of service in instances dating back to 2012. Charter also agreed to overhaul its service by upgrading hardware and submitting to regular quality checks, among other reforms.
More than 700,000 active subscribers are eligible for direct refunds totaling between $75 and $150, according to the press release. Roughly 2.2 million active subscribers will receive the free streaming service and premium channels.
Charter became the U.S.’s second-largest cable TV provider by subscribers after its acquisition of Time Warner in 2016. The company did not admit to any wrongdoing.
"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," Charter spokesman John Bonomo said in a statement to the New York Daily News. "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."