ALBANY -- The state Attorney General's Office has reached a $174.2 million consumer fraud settlement with Charter Communications, parent company of cable and internet service giant Spectrum.
The settlement announced Tuesday by Attorney General Barbara D. Underwood resolves a consumer fraud complaint alleging the company, the state's largest internet service provider, denied customers the fast and reliable internet service they had been promised.
The company now does business as Spectrum, but did business as Time Warner Cable prior to that company's purchase by Charter.
"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 settlement announcement. She said it is the largest payout ever by an internet service provider.
The settlement includes direct restitution of $62.5 million for more than 700,000 active subscribers, each of whom will receive between $75 and $150. Also, 2.2 million subscribers will receive access to streaming channels or premium channels at no cost, which Underwood said is a value of more than $100 million.
The settlement also requires Charter to implement marketing and business reforms, including a requirement to verify internet speeds it provides through regular testing.
The settlement stems from a lawsuit the Attorney General's Office filed against the company in state Supreme Court in New York City in 2017, alleging the company hadn't delivered the internet speeds it promised. The company advertised internet speed of 100, 200, and 300 megabytes per second, the lawsuit said, without maintaining the network capacity to support those speeds.
Under the settlement, consumers who were issued inadequate modems or routers to support the advertised speeds will receive refunds, while 2.2 million others will receive free or access to free premium cable or streaming services. Charter is to notify costumers of their eligibility for video or streaming services within 120 days of the settlement.
In settling, Charter did not admit to any wrongdoing, and a spokesman said the issues stem from the operations of Time Warner, which Charter acquired in 2016 and rebranded as Spectrum.
"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," said Charter spokesman John Bonomo. "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."
The attorney general's lawsuit was part of a larger dispute with the state over whether Charter has met its service expansion promises. In June, the state Public Service Commission fined the company $2 million, and in July the PSC voted to retroactively withdraw its approval of the Charter-Time Warner acquisition -- a decision whose practical implications remain unclear.
Charter is the nation's second-largest cable and internet service provider, with 26 million customers in 41 states.