WASHINGTON, DC–On October 11, the Federal Communications Commission (FCC), hit Comcast Corporation with a $2.3 million fine over their wrongful charges to cable TV customers for services and equipment they never authorized.
The fine, levied by the FCC's enforcement bureau, resolves a two-year investigation of the Philadelphia-based corporation, which was spurred by consumer complaints.
“It is basic that a cable bill should include charges only for services and equipment ordered by the customer—nothing more and nothing less,” said Travis LeBlanc, head of the Enforcement Bureau.
“We expect all cable and phone companies to take responsibility for the accuracy of their bills and to ensure their customers have authorized any charges.”
Both the Communications Act and federal rules, says the FCC, prohibit cable providers from charging subscribers for services or equipment they didn't ask for.
At issue is the practice of "negative option billing," which "burdens customers with the responsibility of contacting [their cable company] to dispute the charges and obtain refunds," according to the FCC.
A similar practice, known as "cramming," takes place when telecommunications carriers tack on unauthorized charges to customers' phone bills, according to the agency.
The government says it received "numerous" complaints from people claiming that Comcast threw charges on their bills for services or products they didn't ever order such as: premium channels, set-top boxes, or digital video recorders (DVR's).
In "some complaints, subscribers claimed that they were billed despite specifically declining service or equipment upgrades offered by Comcast."
Still, in other complaints, consumers said they did not have knowledge of the charges until they reviewed their monthly bills, or received equipment by mail that they had never ordered, says the FCC.
The agency said consumers wasted "significant time and energy" attempting to get the the unauthorized charges removed and obtain refunds.
According to a report by ABC Philadelphia, "The agency said there were "many" complaints about "hours-long and repeated phone calls" to try to fix the problem and claims of "unhelpful or abusive behavior" from customer-service representatives, including calls getting disconnected."
The report adds: "A Senate investigation this summer criticized Comcast and Time Warner Cable, now owned by Charter Communications, for often failing to refund customers who had been mistakenly charged for cable boxes."
The settlement represents the largest civil fine for a cable operator, to date. But "the agency has fined other companies larger amounts, such as a $100 million fine last year against AT&T for slowing cellphone customers' data speeds, according to ABC, adding that AT&T did not agree to the fine and is contesting it.
The fine will not hardly hurt Comcast's bottom line, as the corporation made $8 billion in profit last year, according to the reports.
A Comcast spokeswoman told Reuters that the company did not agree with the FCC's legal theory, but admitted: "We acknowledge that, in the past, our customer service should have been better and our bills clearer."
In a 20-age consent order between Comcast and the FCC, the company agreed to a five-year compliance plan: "Comcast shall for five years provide reports to the [FCC] documenting its compliance with the requirements of the Compliance Plan."
The settlement also requires the cable company to implement a detailed program for "redressing disputed charges in a standardized and expedient fashion and limits adverse action (such as referring an account to collections or suspending service) while a disputed charge is being investigated," says the FCC.