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NY Wrings Concessions from Time Warner Cable

May 19, 2005
The state of New York has reached an agreement with Time Warner Cable, Inc. to change its disclosures about the terms and conditions of promotional rates for its residential high-speed Internet, cable and digital phone services. The company also will ensure that rates do not increase during promotional periods.

"Never before have consumers had so many choices for cable, satellite, Internet and phone services," New York Attorney General Eliot Spitzer said. "This growing competition to attract customers has resulted in some aggressive promotional practices that, at times, has led to misleading advertising."

Spitzer's office raised concerns that a number of Time Warner's direct mail promotions, television commercials, newspapers advertisements and billboards misled consumers about promotional offers.

For example, the company advertised three months of free Road Runner service in the Rochester area, but failed to clearly disclose important conditions, such as the need to keep the high-speed Internet for 12 months.

In Syracuse, the company had advertised "free Digital Cable TV and free HBO for one year" with the purchase of digital phone service. The offer failed to disclose, however, that while consumers would indeed receive free HBO and free digital equipment, they still would be required to pay the full price for digital cable services.

The Attorney General's office also raised concerns about certain billing practices related to Time Warner Cable's promotions. Although Time Warner Cable had offered fixed promotional rates such as "$24.95 for 4 Months," Spitzer's office found instances in which consumers who accepted such offers were billed at increased rates during the promotional period.

In addition, Time Warner Cable required consumers to submit coupons -- provided in specific dollar amounts -- to receive credit for "free" promotional rates for Road Runner service.

However, when the company raised its rates in December 2003, the coupons were insufficient to cover the new monthly fee. As a result, over 300 consumers who had taken advantage of the "3 Months Free" promotion, were each left with a bill of five dollars a month.

Time Warner Cable has identified an additional 335 consumers who were overcharged by the company based on other failures to honor promotional rates. In total, Time Warner Cable will refund $18,500 to consumer resulting from the Road Runner promotions. A settlement administrator will be contacting eligible consumers to provide refund checks.

In addition, at least 33 consumers who were receiving Road Runner service at a promotional rate were told by Time Warner that their rate would increase before the end of the promotional period unless they subscribed to standard cable service, a practice known as "bundling." To avoid the rate increase, these consumers paid unnecessary cable subscription fees. Time Warner has agreed to credit these individuals a total of nearly $6,000.

As part of the agreement, the company will pay $326,000 in civil penalties and costs to the state.

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