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Charter Communications customers to get millions in payments in internet speed fraud case

Key Points
  • Charter Communications will pay $62.5 million in direct refunds to over 700,000 active subscribers in New York in addition to providing free services as a result of a settlement in a fraud case.
  • It was accused of failing to deliver on its claims of speedy internet service.
  • This is the largest consumer payout by an internet provider in U.S. history, according to the New York Attorney General's office.
Tom Rutledge chief executive officer of Charter Communications.
Michael Nagle | Bloomberg | Getty Images

Charter Communications has agreed to a $174.2 million deal to settle fraud charges brought against it by the New York Attorney General Barbara Underwood. The payout is the largest ever in the U.S. to be paid to consumers by an internet service provider, the A.G.'s office said Tuesday.

Underwood alleged that Charter, using its brand names of Time Warner Cable and later Spectrum, failed to provide the speedy internet service it promised customers. As a result of the settlement, over 700,000 active subscribers in New York will be paid $75 to $150 each for a total of $62.5 million in direct refunds. Additionally, 2.2 million active internet subscribers will receive free streaming services and premium channels from Charter valued at $100 million, according to Underwood's office.

"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."

As part of the settlement, Charter will have to update the way it markets its internet service by describing speeds as "wired" and telling consumers that speeds may vary. Charter must also do regular testing to make sure its claims are accurate.

Before the settlement, Charter already paid out $6 million in refunds for inadequate modems, and those subscribers will not be eligible for the settlement payment, the Attorney General's office said. Eligible subscribers will be contacted and refunded by Charter within 120 days, according to the A.G.'s office.

In a statement, Charter said, "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 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. We look forward to continue providing the best TV, Internet, Voice and Mobile products to our customers, and to bringing broadband to more homes and businesses across the state."

Watch: Charter CEO: We see nothing greater than our own customer creation machine

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