Connecticut-based internet service provider Charter Spectrum has been ordered to pay customers $62 million in a fraud settlement after the state attorney general found it had misled customers by advertising internet speeds it couldn’t deliver.
According to a Tuesday announcement, it’s the largest consumer refund from an ISP in US history. The total consumer fraud settlement is $174.2 million, the rest of which will come in the form of premium channels and streaming services. Individuals will receive between $75 and $150 each.
“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 Underwood, in a statement. The settlement “sets a new standard for how internet providers should fairly market their services,” Underwood said.
The New York State Attorney General’s Office launched the lawsuit against the ISP in January 2017, asserting that the internet giant had persuaded customers to sign up for internet plans advertising speeds it knew it couldn’t provide. Many customers only got between 10 to 87 percent of the speeds they paid for, depending on their plan.
The AG claimed that Charter leased modems and routers to customers that were insufficient to deliver such speeds, failed to maintain enough network capacity to support its subscribers, and all while aggressively marketing these expensive “high speed” plans to customers.
Charter also used “hardball tactics” against Netflix and other third-party services that ensured subscribers would suffer “frozen screens, extended buffering, and reduced picture quality,” according to the attorney general.
The settlement also includes a requirement to be more transparent in marketing and to substantiate advertised speeds through regular tests. Charter has already made network enhancements to improve infrastructure in the state following the investigation, according to the attorney general.
Charter has had a fraught history in New York State. The Public Service Commission voting to kick it out of New York entirely earlier this year, due to its deteriorating service following its merger with Time Warner Cable and Bright House Networks. Charter is fighting the decision, and is required to continue to provide service in New York until it can find another ISP to take over its customers.
It’s unlikely that Charter’s service is going to improve overnight, but the settlement—combined with the Public Service Commission’s decision—has increased the pressure on the telecom giant to start providing fair, reliable services to customers, many of whom have no other options in the state.