A three-year investigation into deceptive advertising practices by the former Time Warner Cable has resulted in an $18.8-million settlement — the largest ever in a consumer protection action brought by the Los Angeles County district attorney.
L.A. County Dist. Atty. Jackie Lacey announced the settlement Thursday, saying her office found that 170,000 customers of Time Warner Cable, previously the region’s largest cable TV and internet service provider, were paying for internet speeds that they were not receiving.
District attorneys in San Diego and Riverside counties joined Los Angeles County in the unlawful business practices lawsuit, which was filed last week in Los Angeles County Superior Court. In the complaint, prosecutors accused Time Warner Cable of misleading subscribers, beginning in 2013, to get them to pay for internet speeds that the company couldn’t deliver.
In some instances, customers were given outdated modems, which prevented them from receiving the broadband speeds they had purchased.
“This historic settlement serves as a warning to all companies in California that deceptive practices are bad for consumers and bad for business,” Lacey said in a news conference announcing the resolution. “We as prosecutors demand that all service providers — large and small — live up to their claims and fairly market their products.”
As part of the settlement, $16.9 million in restitution will be paid to eligible customers who received internet service from Time Warner Cable before its sale in May 2016 to Connecticut-based Charter Communications. A few months later, Charter ditched the Time Warner Cable moniker and rebranded its cable TV, phone and internet service under the Spectrum banner.
The money will be returned to Spectrum customers within 60 days as a one-time credit on their monthly internet bills. Eligible subscribers will receive a one-time credit of about $90 on their bills, according to the district attorney’s office.
“That’s nothing to sneeze at,” Lacey said in a phone interview with The Times.
Time Warner Cable customers who were given outdated modems will receive as much as $180. In addition, the nearly 2 million Time Warner Cable internet customers in Southern California will be offered three free months of premium cable channel Showtime. Customers who simply subscribe to Spectrum’s internet service will be offered a free month of a streaming package called Spectrum TV Choice, which is valued at about $40.
Charter agreed that it would “not make misrepresentations or omit material information in connection with advertising, marketing or sales of its internet services,” according to the court settlement. In addition, Charter will be barred from making claims about internet speeds over Wi-Fi unless it can demonstrate that its wireless routers are capable of delivering such speeds.
Charter also must conduct speed tests, as required by the Federal Communications Commission, to verify that it routinely delivers its advertised speeds during peak usage hours of 7 p.m. to 11 p.m.
“We are pleased to have reached this settlement with California regarding certain Time Warner Cable advertising practices in California prior to our 2016 merger,” Charter said in a statement. “We cooperated fully in the review, have resolved this matter comprehensively, and this is expressly not a finding nor an admission of liability.”
The case began in late 2016 when a Time Warner Cable customer complained to the district attorney’s office after realizing that outdated equipment provided by the company limited his internet speeds. “We just started investigating to see how systemic the problem was,” Lacey said.
To gauge the scope of the problem, her Consumer Protection Division investigators scoured public sources, including the Better Business Bureau, and a private database kept by the Federal Trade Commission.
“We saw a pattern of complaints, and we asked the company to come in,” said Hoon Chun, assistant head deputy district attorney in Lacey’s office. “We give companies the chance to explain themselves and cooperate in the investigation. Most businesses, when they are made aware of a problem, cooperate. They want to get things right.”
Chun declined to say whether the office has been investigating other high-speed internet service providers.
Charter also must pay $1.9 million to the district attorney’s offices of Los Angeles, San Diego and Riverside counties to cover their costs associated with the investigation and future consumer protection cases. The amount will be split evenly among the three offices.
The settlement comes less than three weeks before a high-profile primary contest with Lacey and two other candidates, former San Francisco Dist. Atty. George Gascón and former public defender Rachel Rossi, who are vying for Lacey’s job. Lacey has served two terms. Unless one of the three candidates receives more than 50% of the vote, the top two finishers will go head-to-head in November.
Last week, L.A. County Superior Court Judge Gregory Keosian signed the stipulated final judgment, ending the lawsuit over the allegedly deceptive practices.
Charter, for its part, has dramatically raised the internet speeds provided to customers since the Time Warner Cable takeover. Seven years ago, most customers received speeds of less than 50 megabits per second. Charter now offers starting speeds in the Los Angeles area of about 200 megabits per second.
“Charter has made, and continues to make, substantial investments enhancing internet service across the state,” the company said.