LOS ANGELES (CN) – Southern California prosecutors said Thursday that Time Warner Cable will pay $18.8 million to settle claims it provided slow internet service to over 170,000 customers who paid for faster internet speed.
The district attorneys of Riverside, Los Angeles, and San Diego counties sued Time Warner claiming the New York-based company used misleading advertising to lure customers into paying for higher internet speed the company could not deliver.
Time Warner introduced faster internet speeds beginning in 2013 but issued outdated modems, making it impossible to deliver the higher bandwidth customers purchased, according to the complaint filed in LA County Superior Court.
The company has agreed to ensure that its customers are issued modems that can actually deliver advertised speeds and is also prohibited from advertising internet speeds it knows it cannot deliver, prosecutors said Thursday.
LA County District Attorney Jackie Lacey said in a statement the stipulated final judgment between prosecutors and Time Warner Cable is the largest consumer protection settlement in her office’s history.
"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. "We as prosecutors demand that all service providers – large and small – live up to their claims and fairly market their products.
A Time Warner Cable spokesperson did not immediately respond to a request for comment.
Under the settlement, $16.9 million in restitution will be paid directly to customers within 60 days in the form of $90 one-time credits on their internet bills.
Customers who both paid for higher internet speeds and were issued outdated modems will receive $180 in account credits. Additionally, customers who receive internet from the company will be offered one free month of Spectrum Choice, an entertainment streaming service, while those who pay for cable TV will be offered three free months of Showtime.
Time Warner Cable also agreed to pay $1.9 million to the three prosecuting agencies to cover investigative costs.
Riverside County District Attorney Mike Hestrin said in a statement the settlement is a cautionary message to corporations.
“It is important for Riverside County residents to know that they are getting a fair shake,” Hestrin said. “Corporations must absolutely abide by the law. This enormous settlement shows the potential result if they do not.”
LA County Superior Court Judge Gregory Keosian approved the settlement on Feb. 14.
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