TWC Agrees to $1.9 Million Settlement With FTC Over Credit Report Violations
Time Warner Cable will pay a $1.9 million civil penalty as part of a settlement with the FTC for violating the FTC’s Risk Based Pricing Rule, the agency said in a news release Thursday (http://1.usa.gov/19VOsQS). The rule requires companies that give less favorable pricing terms to customers based on negative credit reports to notify customers when there’s something wrong with their credit history. “Getting this notice gives you a right to a free copy of your report, so you can make sure everything on it is correct,” said FTC Bureau of Consumer Protection Director Jessica Rich in the release. “Some of Time Warner Cable’s customers were missing out on this important right.” TWC’s case is the first brought under the 2011 rule, said the FTC.
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When TWC customers purchase cable service, TWC checks their credit report, and may require customers with poor reports to pay a deposit or to pay their first month’s bill in advance, said the FTC complaint, filed along with the settlement agreement in U.S. District Court in New York Thursday. “A substantial proportion of TWC’s prospective customers, those with more favorable credit histories, are not required to pay a deposit or the first month’s bill,” said the complaint.
In January 2011, the FTC approved the Risk Based Pricing Rule in a unanimous vote. According to the complaint, the rule requires TWC to send a risk-based pricing notice to all customers required to pay a deposit or pay in advance based on their credit reports, because those customers are receiving less favorable terms than those who don’t have a poor report. TWC’s violations of the rule date from the time it was enacted until “at least” March 5, 2013, the complaint said. The FTC declined to comment on how TWC’s violations came to light, and TWC declined to comment on any specifics of the case. “We are pleased to have resolved this matter, so that we can focus all of our efforts on providing outstanding services to our customers,” said a TWC spokesman in an interview.
Though the amount of the settlement is probably not significant to a company of TWC’s size, it’s large enough that other carriers will pay attention, said one cable attorney. That could be significant, since some cable operators may not be complying with the rule out of ignorance, the attorney said.
Along with the civil penalty, the settlement enjoins TWC from further violations of the rule, although an FTC staff attorney admitted that such behavior is already prohibited under the existing rule. The settlement also requires the company to send copies of the settlement to management personnel to ensure they are aware of the rule, and imposes special record-keeping burdens on TWC for the next 10 years. The settlement doesn’t include any remediation for the customers who didn’t receive risk-based pricing notices during the period TWC was in violation, said FTC Staff Attorney Katrina Blodgett in an interview. The commission vote approving the complaint and settlement was 4-0, said the release. -- Monty Tayloe (mtayloe@warren-news.com)