Time Warner Cable has agreed to pay a $16.9 million settlement to thousands of consumers in California who did not receive the high-speed internet they paid for, the Los Angeles County District Attorney's Office.
More than 170,000 customers will benefit from the settlement, the largest direct restitution order ever secured in a consumer protection lawsuit by the DA's office, L.A. prosecutors said in a news release.
"This historic settlement serves as a warning to all companies in California that deceptive practices are bad for consumers and bad for business," DA Jackie Lacey said in a statement. "We as prosecutors demand that all service providers - large and small - live up to their claims and fairly market their products. When they don't, my office will take legal action to protect consumers."
The lawsuit over alleged unlawful business practices was filed on behalf of consumers by the district attorneys in L.A., San Diego and Riverside counties.
The suit accused the company of luring consumers to pay for high-speed internet through misleading advertising practices starting in 2013. But the provider could not deliver the faster internet, according to the release.
"Time Warner Cable cooperated in the investigation and resolution of this case but did not admit liability," the release stated.
The stipulated final judgement between prosecutors and the company was signed by an L.A. County Superior Court judge last Friday.
The settlement calls for $16.9 million in restitution to be distributed to eligible customers, who will receive a monetary amount based on the type of service they purchased, according to the release.
Customers who were issued outdated modems that made it impossible to receive the higher bandwidth they purchased, as well as those who bought faster internet speeds that the company's infrastructure couldn't deliver, will receive a one-time credit of approximately $90. Some consumers who fall under both will get up to a $180 credit.
Most of the money will be returned through automatic credits on customers' monthly cable/internet bills from Spectrum, which became the parents company of Time Warner Cable after a merger in 2016.
Spectrum has 60 days to issue the credit to eligible customers.
All Time Warner Cable internet customers in the state will also be offered one of two free services: those who subscribe to cable TV will be offered three free months of Showtime, provided they're not already paying for the channel; and subscribers who only have internet will be offered a free month of Spectrum Choice, which is an entertainment streaming package.
The offers are valued at $45 and $40 respectively.
Additionally, Time Warner Cable will pay $1.9 million to the three prosecuting agencies, to be split evenly, for costs associated with the case.
That brings the total settlement in the case to $18.8 million.
The lawsuit will also result in the company not advertising internet speeds that it knows, or should know, can't be delivered consistently during peak hour, and it must issue equipment that delivers the advertised speeds.