Comcast yesterday was ordered to refund nearly 50,000 customers and pay a $9.1 million fine when a judge ruled that it violated Washington state consumer protection law hundreds of thousands of times.
Washington State Attorney General Bob Ferguson sued Comcast in August 2016, accusing the nation's largest cable company of tricking customers into buying a "near-worthless 'protection plan' without disclosing its significant limitations."
Buying the $5-per-month plan ostensibly prevented customers from having to pay each time a Comcast technician visited their home to fix problems covered by the plan. But in reality, the plan did not cover the vast majority of wiring problems, the AG's lawsuit said. Moreover, Washington state attorneys said that Comcast led customers to believe that they needed to buy a Service Protection Plan (SPP) to get services that were actually covered for free by the company's "Customer Guarantee."
In yesterday's ruling, King County Superior Court Judge Timothy Bradshaw found that "Comcast violated the Consumer Protection Act more than 445,000 times when it charged tens of thousands of Washingtonians for its Service Protection Plan without their consent," Ferguson's announcement said. Each wrongful monthly charge was a separate violation, so there were multiple violations per customer.
Washington state attorneys sought more than $171 million, asking the judge to order Comcast to pay $88 million in restitution to customers and $83 million in fines.
The $9.1 million fine Comcast was ordered to pay is a fraction of the amount sought by Washington. But Comcast's refunds to customers are separate from the fine, and it's not clear exactly how much they'll amount to.
The AG announcement said:
The court found that Comcast added the SPP to the accounts of 30,946 Washingtonians without their knowledge, and did not tell an additional 18,660 Washingtonians the true cost of the plan. The court ordered Comcast to refund affected consumers, and pay 12 percent interest on the restitution. The amount of restitution is unknown at this time, but is expected to be significant. The court ordered Comcast to issue the refunds within 60 days and report to the state on the specific details and amounts.
Comcast enrolled customers without consent
Comcast violated the consumer protection law "each time it enrolled a Washington consumer in the SPP without their consent and each time it charged a Washington consumer for the SPP following enrollment without consent," the judge wrote.
The judge's ruling further said:
Comcast's unfair or deceptive acts of enrolling Washington consumers in the SPP without their consent, and charging for the SPP following unauthorized enrollment, affected the public interest. Call recordings produced by Comcast show that over one third of Washington SPP customer accounts subscribed via telephone were subscribed to the plan without their consent between July 2014 and June 2016. Pursuant to the parties' stipulation and SPP subscription data produced by Comcast, at least 20,128 customer accounts were subscribed without consent between April 2015 and June 2016 alone (a time period during which Comcast made 71,944 new SPP sales to Washington customers) and 10,818 additional customer accounts were subscribed without consent between July 1, 2014 and March 31, 2015. Numerous consumers were injured in the same manner, i.e., they were subscribed to the SPP, and charged for the SPP, without their consent, and Comcast's subscription practices for obtaining affirmative consent remained unchanged from 2011 to mid-2017.
Washington had alleged that Comcast misled 500,000 Washington consumers and deceived them into paying at least $73 million in subscription fees over a five-year period. Washington state attorneys argued that Comcast committed 1.8 million violations of the Consumer Protection Act, saying that Comcast made false claims regarding the scope of its service protection plans to 700,000 customers and "deceptively represented the scope of its Customer Guarantee to over 1.17 million Washington consumers."
Ferguson also alleged that "Comcast deceived consumers even when mentioning the SPP, telling them the SPP plan was 'free' when they signed up, when in fact, Comcast would automatically charge them every month after the first month."
Recordings of sales calls showed that Comcast often enrolled customers in the service plan even when customers "explicitly rejected" the offer, Ferguson's office said.
Comcast not saved by arbitration clause
Comcast claimed that the court can't order refunds because of the arbitration clause it puts in customer agreements. But Judge Bradshaw wrote that "[t]he State's authority to seek restitution, however, is not derivative of the rights of the individual customers, but is rather intended to benefit the general public."
The judge didn't accept the AG's request for refunds consisting of all service protection plan revenue. "The restitution amounts contemplated here are the actual improper charges, less prior refunds and service call expenses," the judge's ruling said. The ruling covers service-plan sales between Dec. 25, 2013 and July 1, 2017.
Although yesterday's ruling fell far short of what Washington requested, Ferguson's office said that it still set a record. "The nearly $9.1 million penalty represents the highest trial award in a state Consumer Protection case, even before including restitution," the AG's office said. The previous record was $4.3 million, which was "awarded to the state after a 2016 trial in Ferguson's case against Living Essentials and Innovation Ventures over the company's misrepresentations about 5-hour Energy," the AG's office said.
When the lawsuit was filed, Comcast said it had already fixed the problems raised by the attorney general. But Ferguson said that he filed the lawsuit because negotiations with Comcast didn't produce a big enough settlement.
It's not clear whether Comcast will appeal the ruling, but the company appears to be happy it doesn't owe more.
"We're pleased that the court ruled in our favor on several of the attorney general's key claims and awarded less than 5 percent of what he was seeking in damages," Comcast said in a statement to Ars. "The judge recognized that any issues he did find have since been fully addressed by Comcast through the significant investments we have made in improving the customer experience and consent process, and that throughout Comcast acted in good faith. We will continue to make significant investments in how we serve our customers because it is the right thing to do and are fully committed to our customers in Washington."
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